Changes to Credit Card Surcharge Laws

Posted on Aug 26, 2016 by Dean Frith   |   Categories: Commercial & Business Law

Business and consumers take note that from 1 September new laws come into force that aim to prevent businesses from charging ‘excessive’ surcharges for credit and debit card payments.

The Competition and Consumer Amendment (Payment Surcharges) Bill 2015 (Cth) was passed earlier this year which contains a new law providing that “a corporation must not, in trade or commerce, charge a payment surcharge that is excessive”. In addition, the ACCC now has enforcement and investigation powers including being able to issue a notice to corporations requiring them to provide evidence about their payment surcharges and the actual cost of processing payments.

For years consumer rights organisations such as CHOICE have advocated for Government to regulate surcharges to ensure that they reflect the actual cost of accepting payment by electronic means.  A recent investigation conducted by CHOICE showed that in the case of airfares booked online some airlines were charging surcharges that were in excess of 1,000% the actual cost to the airline of processing the payment via credit card.

In May the RBA published its Standards for merchants charging surcharges.  The Standards apply to ‘large merchants’ from 1 September 2016, and to all other merchants from 1 September 2017.  A ‘large merchant’ is one that satisfies at least two of the following three requirements: it has consolidated gross revenue of $25 million or more, the value of its consolidated gross assets is $12.5 million or more, or it employs 50 or more employees.

If a business chooses to impose a surcharge on its customers for making a payment using a credit, debit or prepaid card, prior to these laws coming into force businesses should review the RBA Standards (available on-line) and review the level of their surcharges to ensure that they comply with the new laws.

For more information please contact our experienced Commercial Law team at Baker Love (02) 4944 3322.