ACCC to crack down on credit card surcharges from September, but SMEs will have 12 months’ breathing room

The Australian competition watchdog will crack down on big businesses passing on excessive credit card surcharges from September.

However, smaller businesses have an extra 12 months to make sure they are compliant with changes to how surcharges can be added to card transactions.

Read more: Businesses could face $100,000 penalties for excessive credit card surcharges

Under the new guidelines, unveiled by the Reserve Bank of Australia yesterday, retailers will not be able to charge customers for using eftpos, visa, debit and credit cards at a rate that is more than what it actually costs to process the payment.

“Merchants will not be able to impose high fixed-amount surcharges on low-value transactions, as has been typical for airlines,” the RBA said in a statement.

The Australian Competition and Consumer Commission will be in charge of enforcing the new rules.

It will start cracking down on excessive credit card surcharge practices from September, however there are exceptions.

Businesses that are not ‘large merchants’ will be exempt from the rules until September 2017.

A company is considered not to be a large merchant if it turns over less than $25 million, employs less than 50 people or its consolidated gross assets are worth less than $12.5 million.

ACCC chair Rob Sims said in a statement the changes will result in a fairer system for everyone.

“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,” Sims said.

“The limit will be linked to the direct costs of the payment method such as bank fees and terminal costs. 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.”

Excessive fees are not in the “business or consumer interest”

Christopher Zinn, spokesperson for the Surcharge Free campaign – a group of retailers and associations opposed to credit card surcharges – told SmartCompany yesterday’s announcement is a step in the right direction.

“It’s fair enough that businesses are free to surcharge to recover their costs,” Zinn says.

“But if surcharging were to become the norm and totally normalised, we don’t think that’s in the business or consumer interest. Even if it’s a small amount – we’re talking 1% or 1.5% – when it comes at the end of an experience at, say, a restaurant, there is real potential to leave a bitter taste in the mouth of consumers.”

Zinn hopes the updated guidelines will reward retailers who are already not passing on excessive credit card fees by creating an even playing field.

“You might get a small, instant return [with an excessive fee], but that might come at the cost of customer loyalty and experience,” he says.