ACCC Tasked with Enforcing Compliance for Excessive Credit Card Surcharges
Tuesday 31 May 2016 @ 9.28 a.m. | Legal Research | Trade & Commerce
It has been revealed that the Australian Competition and Consumer Commission (ACCC) will begin enforcing the ban on excessive surcharges for credit cards for large merchants on 1 September 2016.
Early in May 2016, the Reserve Bank of Australia Payments System Board (PSB) published its Standard which relates to surcharges by merchants when charging customers for the use of a credit or debit card. Surcharges will be excessive where they exceed the permitted cost of acceptance, as defined in the Standard.
Background to the Enforcement Action
The new surcharging law arose out of a recommendation in the Report of the Financial System Inquiry (FSI) which had the objective of improving the efficiency and effectiveness of price signals and reducing the potential for cross-subsidisation between customer groups and merchant groups.
The Competition and Consumer Amendment (Payment Surcharges) Bill 2015 (Cth) was introduced into the House of Representatives on 3 December 2015. It was passed by Parliament on 22 February 2016 and received Royal Assent on 25 February 2016.
Nothing in the Standard alters the existing obligations of businesses to comply with the provisions of the Australian Consumer Law (ACL), as set out in [Schedule 2] to the Competition and Consumer Act 2010 (Cth), which deal with false and misleading representations about the price of goods or services.
Definition of “large merchant”
The Standard defines a “large merchant” to be one that satisfies at least two of the following requirements:
- it has a consolidated gross revenue of $25 million or more;
- the value of its consolidated gross assets is $12.5 million or more; or
- it employs 50 or more employees.
The Standard will apply to six card systems:
- EFTPOS;
- Debit MasterCard;
- MasterCard Credit;
- Visa Debit;
- Visa Credit; and
- American Express cards issued by Australian banks.
Response from the ACCC
Commenting on the new Standard in a recent ACCC Media Release, the ACCC Chairman Rod Sims said:
“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. The limit will be linked to the direct costs of the payment method such as bank fees and terminal costs.”
The Standard defines what businesses are able to include in setting a surcharge and sets out a two-staged implementation, with the ban commencing on 1 September 2016 for “large merchants” and 1 September 2017, for all other merchants.
Public reaction to the fees
According to Christopher Zinn, a spokesman for the Surcharge Free campaign, the announcement is a step in the right direction.
He said:
“It’s fair enough that businesses are free to surcharge to recover their costs. 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. You might get a small, instant return [with an excessive fee], but that might come at the cost of customer loyalty and experience.”
Mr Zinn hopes the updated guidelines will reward retailers who are already not passing on excessive credit card fees by creating an even playing field.
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Sources:
ACCC to crack down on credit card surcharges from September, but SMEs will have 12 months’ breathing room – smartcompany.com.au
ACCC to commence excessive surcharge compliance role on 1 September 2016 – ACCC Release MR 88/16
