Do you often go to pay with a certain debit or credit card and get told a surcharge applies? Does this surcharge seem excessively high?
This might end when a prohibition on charging of excessive payment surcharges for certain payment methods extends to all businesses from 1 September 2017. Instead, businesses will only be able to pass to customers what it actually costs to process a payment.
When will a payment surcharge be considered “excessive”?
The Reserve Bank has set this out in a new standard which determines when a surcharge is excessive.
It’s called “the cost of acceptance” and is calculated over a particular 12 month period. It will be expressed as a percentage of the total value of card transactions, and includes the following costs:
o Merchant services
o Rental and maintenance of card terminals
o Gateway or fraud prevention services
o International service assessments
o Cross-border transactions
o Fraud-related chargebacks
o Premiums to insure against forward delivery risk
How will the ACCC monitor these changes?
The ACCC can make merchants substantiate a surcharge including issuing notices to corporations to provide documents and information evidencing the surcharge. Non-compliance could attract penalties over $1 million per contravention.
What should your business be concerned about?
o Working out the right surcharge in accordance with the RBA standard;
o Being able to substantiate that surcharge for each payment option;
o Ensuring that calculation is adjusted as the underlying costs change;
o Retaining key documents to substantiate the calculation in case the ACCC issues a surcharge information notice; and
o Maintaining compliance with existing Australian Consumer Law requirements (such as false or misleading representations) when presenting surcharges to customers.