Thursday, 01 September 2016 12:45

Ban on 'excessive' payment surcharges now in effect: ACCC

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New bans on large businesses charging consumers excessive payment surcharges have now come into effect, prompting a reminder from the ACCC that the new law limits the amount  large business can charge customers for use of payment methods such as most credit and debit cards.

Under the new laws, which came into effect on Thursday (1 September), businesses can only pass on the permitted costs of the payment method such as bank fees and terminal costs.

Chairman of the Australian Competition and Consumer Commission, Rod Sims, says the new law has caused many large businesses to review their pricing practices.

“We expect to see a move from flat-fee surcharges for purchasing items like flights, towards percentage-based or capped surcharges. The ACCC is aware that some event ticketing companies are intending to change their pricing practices from 1 September such that consumers will no longer be charged fees based on the payment method chosen.”

Sims says the RBA has indicated, as a guide, that the costs to merchants of accepting payments by debit cards is in the order of 0.5%, by credit card is 1-1.5%, and for American Express cards it is 2-3% - and some merchants’ costs might be higher than these indicative figures.

For the first year, the law only applies to large businesses, defined as having two of the following: gross revenue of $25 million or more, gross assets worth $12.5 million or more, or with 50 or more employees. It will apply to all businesses from 1 September 2017.

Sims says the ACCC has been raising awareness of the ban in the lead-up to 1 September, including engaging with many large businesses to ensure they are aware of their obligations.

And, consumers who believe they have been charged an excessive surcharge can contact the ACCC via the ACCC’s website.

“We will be enforcing these new rules from today, and the ACCC encourages all large businesses that haven’t already to ensure their payment charging methods are in line with the new law,” Sims said.

He says it is important to note that businesses can still charge other fees, such as "booking fees" or "service fees" which apply regardless of the method of payment, but in doing so, those businesses must still comply with the Australian Consumer Law in terms of ensuring the disclosure of any such fees is upfront and clear.

“Passing on the cost of processing debit and credit card payments is not mandatory for businesses. Indeed, the ban has no effect on businesses that choose not to impose a payment surcharge,” Sims notes.

The ACCC has published online guidance material on the new laws for consumers and businesses.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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