KXBbwBusinesses that charge excessive payment surcharges are now on notice from the Federal Government to clean up their act or face hefty penalties.

The Competition and Consumer Amendment (Payment Surcharges) Act 2016 has passed Parliament and now “a corporation must not, in trade or commerce, charge a payment surcharge that is excessive”.  A “payment surcharge” is an additional amount charged for processing payment for goods or services or for using one payment method over another.  A payment surcharge will be “excessive” if it breaches standards to be set by the Reserve Bank of Australia (RBA), which has indicated that surcharges must not be greater than the actual costs of accepting payment by those methods.

Credit card surcharges in retail shops, cafes and restaurants, for example, will have to be reconsidered. The consumer group Choice has its sights set on booking, transaction and service fees, particularly in the airline, ticketing and taxi industries.  A Choice investigation recently indicated that the major airlines credit card booking fees are 348.72%, 633.33%, 1,187.88% and 1,048.65% more than the actual cost to the airlines in processing those payments.  Consumers may see those types of fees come down in coming months in anticipation of the publication of the RBA’s standards on excessive payment surcharges.

The Australian Competition & Consumer Commission (ACCC) can issue an infringement notice to a listed corporation (such as the major airlines) with a penalty of $108,000 or $10,800 for an unlisted corporation. An infringement notice can be withdrawn if the corporation satisfies the ACCC that its payment surcharge is not excessive.

Businesses should keep an eye out for information from the providers of their merchant facilities on the average cost of processing payments. The banks will be expected to provide such information. That average cost may then be passed on as a surcharge. Booking fees that apply to one payment method over another should be reconsidered and the fees cannot exceed the cost of processing payment by that method.

At Everingham Solomons we’re happy to advise and assist businesses with all their day-to-day compliance obligations because Helping You is Our Business.

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