The Australian Competition and Consumer Commission (ACCC) has confirmed it will begin enforcing the ban on excessive credit or debit card surcharges for large merchants on 1 September 2016. Smaller merchants will get another year’s grace.
The Reserve Bank of Australia (RBA) has announced regulations aimed at preventing merchants from gouging customers on credit card fees.
From 1 September 2006, surcharges passed on to consumers will have to reflect the actual cost to the merchant.
The RBA has singled out airlines in particular when it comes to imposing high fixed amount surcharges on low-value transactions, ABC News reported.
AFTA has now released specific details in relation to the RBA announcement, as they affect the industry. See: AFTA highlights vital points in new surcharges scheme. The matter is complex, AFTA chief executive Jayson Westbury says.
The Reserve Bank of Australia Payments System Board (PSB) last week published its Standard, which relates to surcharges by merchants when charging customers for the use of a credit or debit card. Surcharges will be excessive where they exceed the permitted cost of acceptance, as defined in the Standard.
ACCC chairman Rod Sims said: “In short, the new provisions will limit the amount businesses can surcharge customers for use of payment methods such as most credit and debit cards. The limit will be linked to the direct costs of the payment method such as bank fees and terminal costs.”
Consumer group Choice believes consumers have been ripped off by airlines and ticket merchants for years, according to ABC News, with some credit card booking fees marked up by more than 1000%.
“Qantas, Virgin, Jetstar, Tiger, Ticketek, Ticketmaster, what they’ve been doing is when you pay with your credit card, instead of just recouping the cost of providing that service to you, they’ve been using it as a profit,” Choice spokesperson Tom Godfrey told ABC News.
The ACCC says the RBA Standard defines what businesses are able to include in setting a surcharge and sets out a two-staged implementation, with the ban commencing on 1 September 2016 for ‘large merchants’ and 1 September 2017 for all other merchants.
The Standard defines a ‘large merchant’ to be one that satisfies at least two of the following requirements: it has a consolidated gross revenue of AUD 25 million or more, the value of its consolidated gross assets is AUD 12.5 million or more, or it employs 50 or more employees.
The Standard will apply to six card systems – EFTPOS, Debit MasterCard, MasterCard Credit, Visa Debit, Visa Credit and American Express cards issued by Australian banks.
“The ACCC is finalising online guidance material for consumers and businesses, which will provide further information on the ACCC’s enforcement role, what businesses need to do in order to comply, and how consumers can make complaints if they believe a business has charged a payment surcharge that is excessive,” Sims said.
“We will focus on education and awareness in the early stages but won’t turn a blind eye to possible breaches, particularly for those large businesses clearly on notice of these changes.”
The ban has no effect on businesses that choose not to impose a payment surcharge, such as the many businesses in Australia that incorporate payment system costs into their overall prices.
Material on the RBA’s website provides detailed information for businesses about the Standard, including how businesses can identify and quantify those costs that can be passed on to a consumer as a surcharge. The Standard is available at www.rba.gov.au
Nothing in the Standard alters the existing obligations of businesses to comply with the provisions of the Australian Consumer Law, as set out in the Competition and Consumer Act 2010, which deal with false and misleading representations about the price of goods or services.
Edited by Peter Needham