The government has made it official: tough new laws to protect consumers from excessive credit card surcharges have been introduced into Parliament, to take effect from mid-2016.
The Competition and Consumer Amendment (Payment Surcharges) Bill 2015 will ban excessive payment surcharges. If accepted by Parliament, the Bill will take effect from mid-2016, to give merchants time to adjust their surcharges.
Penalties will be ordered for excessive surcharging
The new legislation gives the Australian Competition and Consumer Commission (ACCC) new powers to punish excessive surcharging:
- Gather information from all involved in the payments process
- Issue infringement notices against merchants with excessive surcharges
- Charge penalty of 600 penalty units (amounting to $108,000 at the time of writing) per breach
This is a key step in making the Bill not just a list of “best practices” for merchants, but a powerful tool for positive change in our competitive commerce industry.
What is excessive?
Credit card surcharges are supposed to represent the cost to the merchant of accepting payment by credit card. The government has declared it is excessive when a merchant charges the customer any more than the cost of the transaction.
The Reserve Bank of Australia’s Payments System Board will be regularly setting and re-setting the standards for allowable payment surcharges. The RBA has already put forward their draft of a new surcharging framework, including:
- More defined guidelines around card acceptance costs
- Statements from banks to merchants stating average cost of accepting each payment method
- Setting out of costs in percentage terms instead of fixed amounts
The new framework will also see American Express companion cards brought under the same regulations as that of Visa and MasterCard.
The Australian Retailers Assocation (ARA) has already come out in full support of the government and the RBA’s stance on reducing excessive surcharging. Executive Director Russell Zimmerman said:
“The ARA is supportive of the RBA’s stance on surcharging and will be pleased to see greater clarity around what can be surcharged and what cannot be surcharged by retailers should these proposals be enacted.
Proposed surcharging frameworks by the RBA include more defined guidelines around card acceptance costs, statements by banks to merchants stating average cost of acceptance for each payment method, and the setting out of costs in percentage terms, as opposed to fixed payments..”
Have your say
Anyone who wants to have a say in the surcharges should definitely get involved in the Reserve Bank’s consultation process. Go online and read the RBA’s Review of Card Payments Regulation – Consultation Paper, then make a written submission by 3 February 2016.
Contact the RBA Media Office to make your submission, or for more information:
Phone: +61 2 9551 9720
Email: rbainfo@rba.gov.au
The Bill and its Explanatory Statement can be viewed on the Parliament’s website here.
Compare credit card interest rates
The post The end of excessive credit card surcharges appeared first on Canstar.