Businesses Face Fines for Excessive Credit and Debit Surcharges

Businesses Face Fines for Excessive Credit and Debit Surcharges

If you’ve noticed you’re not being hit with those surcharges on card payments, it’s for a good reason. As of September 1 2017, small business owners risk being fined thousands of dollars if they’re caught placing excessive surcharges on credit or debit card payments.

Under the new rules, small business owners are not able to charge more than the cost to accept payments through EFTPOS, Visa, MasterCard, or American Express cards.

The exact cost considered to be excessive will vary depending on the type of card and bank provider, as these figures are not the same.

Sydney Morning Herald has reported merchants typically only pay their banks a very small portion of the transactions total value.

According to Clancey Yeates, only 0.5 per cent of the total transaction value is paid to their banks, 1 to 1.5 per cent for Visa and MasterCard payments, and 2-3 per cent for American Express cards.

“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,” deputy chair of the Australian Competition and Consumer and Commission, Michael Schaper said.

“The only costs businesses can include are external costs charged to you by your financial provider.”

The ACCC is enforcing the ban and will be able to issue fines of $2,500 for sole traders that breach the rules, $12,000 for proprietary limited companies, or $120,000 for an ASX-listed company. For more serious breaches it can seek penalties of up to $1.3 million from a court.

In order for businesses to understand the correct surcharge fee, banks have needed to share what they are being charged to accept credit and debit payments in percentage terms.

To give you an idea of what may be an excessive surcharge fee, a 10c surcharge for a $3.50 cup of coffee paid on credit is too much for the most common credit cards.

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