Avoiding surcharges for card payments

To avoid being slugged with excessive charges for paying by card during the busy Christmas and holiday shopping period, consumers should be aware of the national restrictions on surcharging by businesses for payments made by debit, credit or prepaid cards, and lookout for businesses that may not be complying.

The Queensland Consumers Association’s spokesperson, Ian Jarratt, says that since 1 September 2017 all businesses surcharging for e payments must comply with national laws and rules that first applied to large businesses in 2016.

The restrictions apply to these payment types:

  • Eftpos (debit and prepaid)
  • Visa and MasterCard cards (credit, debit and prepaid)
  • American Express cards not issued directly through American Express.

The key restrictions include that a surcharging business must:

  • Not charge more than what it costs to process the payment
  • If using one surcharge for several types of payment, set the surcharge to reflect the cost of the lowest cost payment type.

The Association says that possible non-compliant surcharges that consumers should be on the lookout for include:

  • A fixed $ amount surcharge for small transactions, for example 50 cents for a transaction of less than $10.
  • A single high surcharge for payment by either a debit or a credit card.
  • Large discounts for payment by cash.
  • Surcharges substantially above the Reserve Bank (RBA) guidelines.

The Guidelines say that:

  • Payments through the domestic eftpos system are usually quite low.
  • A Visa or MasterCard debit transaction may cost a business around 0.5 per cent of the transaction value.
  • Credit cards may cost the business up to 1-1.5 per cent for Visa and MasterCard, and between 2-3 per cent for an American Express card payment.

However, businesses have different costs so some charges higher than these levels may be justified.

The national surcharging restrictions do not apply to taxi services.  However, in many states a 5% cap now applies to surcharging for e payment for taxis.

The Australian Competition and Consumer Commission (ACCC) is responsible for monitoring and enforcing compliance with the surcharging laws and rules and provides more information here.

Consumers wishing to complain about possible non-compliance can ring the ACCC 1300 302 502 or click here.