The ban has been in place since September last year, and is now extended to all businesses based in Australia, or using an Australian bank.
“The good news for consumers is that businesses can now only surcharge what it actually costs them to process card payments, including bank fees and terminal costs," ACCC Deputy Chair Dr Michael Schaper said.
"For example, if a business’s cost of acceptance for Visa Credit is 1.5 per cent, consumers can only be charged a surcharge of 1.5 per cent on payments made using a Visa credit card.
“Our message to business is that you are not allowed to add on any of your own internal costs when calculating what surcharge you will charge customers. The only costs businesses can include are external costs charged to you by your financial provider.”
Payment types that are not covered by the ban include BPAY, PayPal, Diners Club cards, American Express cards issued directly by American Express, and cash and cheques. These companies may have their own frameworks and merchant agreements.
Council of Small Business Australia CEO Peter Strong says that small businesses should be transparent with their customers about credit card surcharge fees.
“We want people to be aware that 95 per cent of small businesses out there are doing the right thing and are not trying to rip customers off.”
“We want people to be aware that 95 per cent of small businesses out there are doing the right thing and are not trying to rip customers off.”
He adds that some businesses could be charging excessive fees because it ultimately affects their bottom line.
“It’s not just about the fees on the credit card - it’s also about admin costs, machine costs, and matching the sales with the bank account.
“When people are running a small business on low margins, they don’t have a choice but to pass that cost on.”
Under these new laws, businesses are allowed to have an EFTPOS minimum but they must comply with surcharging laws if they charge a fee for transactions under this amount.
Cantina Movil is a food truck operating in Sydney which charged a $0.50 transaction fee for payments under $10.
Founder Stephanie Raco says these new laws could add thousands in business costs in the long-term.
“Business owners aren’t always just charging fees for no reason - the cost usually comes from somewhere," she said.
“With transaction fees, admin fees and terminal charges, the cost to maintain an EFTPOS payment system adds up to hundreds of dollars a month.
“We’ll be racking our brains for where we can offset the balance.”
To sum up:
- Credit card and EFTPOS surcharges must match how much it costs to process the card payments.
- EFTPOS minimums aren’t affected, but the business will have to comply with surcharging laws if they charge a fee for transactions under the amount.
- Depending on the size of the business, infringement notices start at $2,520 and can reach $126,000.
- For more information on these new laws, head to the ACCC website.
The transaction fee-free movement
For many small businesses, getting rid of transaction surcharges altogether has been beneficial for their business, particularly since Australia is evolving into a cashless society.
According to the Reserve Bank of Australia, 52 per cent of payments were made with debit or credit cards last year.
Anas Ezmigna, owner of Zaaki Espresso in Newcastle, says charging fees and EFTPOS minimums are generally unattractive to customers, meaning they will be less likely to return.
“Some customers just want a coffee. They don’t want anything else.
“Charging them an extra $0.03 only to lose their business isn’t worth it, and we don’t want to turn people away with an EFTPOS minimum.”
Anas Ezmigna and his wife Penny Saris, owners of Zaaki Espresso. Source: SBS
While copping heavy transaction fees might not be an option for some businesses, others found that shopping around meant they could avoid paying more or charging customers extra.
Nina Siljanovic switched EFTPOS terminal providers and saved her business, The Nutty Baker, from absorbing the transaction fees.
“I was on an EFTPOS plan where the bigger the transactions, the bigger the fees.”
“Switching to a new provider means I no longer pay an EFTPOS machine rental fee, and the rate is based on our monthly revenue from credit card transactions, rather than a set percentage of each transaction.”
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