Retailers urged to prepare for excessive surcharge ban

Small businesses are reminded to prepare for a ban on excessive card transaction surcharges, due to come into effect in September this year.

The ban follows a move by the Reserve Bank of Australia to curb over-the-top surcharges on credit and debit transactions imposed by large businesses, which allowed a 12-month grace period for small businesses like convenience retailers.

In this case, small businesses are defined as those businesses with a gross annual revenue of less than $25 million; gross assets of less than $12.5 million, or less than 50 employees.

From September 1 this year, small businesses will no longer be allowed to charge more than the ‘acceptance cost’, or total banking cost of a single transaction using payment methods such as EFTPOS, Mastercard, Visa and American Express.

Payment types that are not covered by the ban include BPAY, PayPal, Diners Club cards, American Express cards issued directly by American Express, cash and cheques.

ACCC deputy chair Dr Michael Schaper urged small businesses to review their surcharge levels to ensure compliance when the ban comes into effect in two months.

“Businesses can only pass on to customers what it costs them to process a payment such as bank fees and terminal costs,” he said.

“For example, if your cost of acceptance for Visa Credit is one per cent you can only surcharge one per cent on Visa credit card payments onto your customers.”

Since June 1, banks and payment facilitators were required to provide statements that clearly set out the average cost of acceptance for each card scheme. Such information can be used to set a standard cost of acceptance surcharge to apply when customers use electronic means of payment.

The ACCC stated that small businesses will receive information from their banks, in order to help calculate appropriate surcharges when accepting debit and credit cards, and has also published a fact sheet so business owners can better understand their obligations.

“Banks are required to send businesses merchant statements which clearly set out the business’ costs of acceptance for each payment method. The ACCC urges businesses to follow up with their bank if they have not yet received these statements,” Dr Schaper said.

“In the lead up to last year’s excessive surcharging ban on large businesses, many reviewed and amended their surcharging practices to reflect the costs to the business and we hope small businesses will do the same.”

The ban has no effect on businesses that do not impose a payment surcharge on card transactions.

For further information about the upcoming ban, see our special feature on surcharging.

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