Businesses could face $100,000 penalties for excessive credit card surcharges

What the government’s decision to curb excessive credit card surcharges means for small business

The competition watchdog has been given stronger powers to crack down on excessive credit card surcharges after the Senate yesterday passed legislation aimed at protecting consumers from unnecessary fees.

The measures were recommended by the financial services inquiry and were introduced into parliament last year.

The laws will mean the Australian Competition and Consumer Commission will be able to issue infringement notices worth up to $108,000 to companies it believes are slugging customers with excess credit card surcharges.

As it currently stands, excessive surcharging by merchants may be prevented under contractual arrangements with payment systems but are not explicitly banned under the law.

The rules approved by the Senate yesterday are aimed at preventing businesses from charging customers more than what it costs to accept their payment method.

In addition, the Reserve Bank of Australia has been tasked with helping to set out what kind of surcharges are permissible by developing appropriate guidelines.

The ACCC will be in charge of enforcing the new surcharge rules, with listed corporations facing a maximum penalty of $108,000 for breaking the law.

Incorporated bodies that are not listed corporations will meanwhile face a penalty of $10,800 if they are found to have hit consumers with excessive surcharges.

Meanwhile, unincorporated businesses, will face a penalty of $2160 if the consumer watchdog suspects they have breached the rules.

Should the business not comply with the infringement notice, the ACCC can then take the matter to court.

New surcharge laws expected to provide greater certainty for Aussie retailers

A spokesperson for the Australian Retail Association told SmartCompany this morning the organisation has been advocating for these laws for some time.

A crackdown on excessive surcharges is welcomed, according to the ARA, because additional rules will provide clearer guidelines for retailers.

“It’s a great first step,” the ARA spokesperson says.

“We look forward to seeing it play out. We’ll be working with the government on the rest of their recommendations from the Financial Services Inquiry.”

Rohan Harris, principal at Russell Kennedy lawyers, told SmartCompany this morning the new legislation builds on existing laws that require companies not to act in a way that is misleading or deceptive – for example, when making representations about the cost paying by credit card when purchasing airline tickets.

“I think these new laws will give the ACCC more specific powers to deal with these instances,” Harris says.

“The issuing of infringement notices is important as well, because it’s an additional enforcement power and doesn’t mean they [the ACCC] need to go to court to exercise their watchdog role.”

Broede Carmody is a former senior reporter at SmartCompany. Previously, he was a co-editor of RMIT University's student magazine Catalyst.

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  • JV_at_lAttitude_in_Cairns

    Just a baby step! The sooner something is done about the usurious credit card interest rates the more likely I will respect the powers of the regulatory authorities – current level of respect …. ZERO

  • BJG

    Start with Telstra!

  • Marcus

    ACCC should probably start with all the airlines in Australia, they charge exorbitant fees when paying through credit cards. Somehow, I don’t see this being strictly enforced though, as most of the big airlines will getaway with challenging ACCC in court.

  • SignaturesofAU

    I hate being charged a “fee” to pay. The choice of how we pay is ours, and shouldn’t be dictated by fees from businesses. I made it a point in my own business (Signatures of Australia) to not charge any fees, have no minimum, and accept American Express (also without fees)! I choose to take payment, however you want to pay me 🙂

  • Industry Travel Asia

    Like SignaturesofAU we (www.Future.Travel) put it up front that we charge no fees. In market research of what really causes angst for shopper/customer is getting to checkout only to find that the cost doesn’t include some fee, baggage, or credit card charge. Transparency has to start in everyday transactions… then take it to Canberra…


    This is pointless, while the watchdog might be able to force them to reduce credit card surcharges companies will simply push that cost on to the service they charge I. E. Taxi outrageous credit card surcharges will be offset by higher cab fees.

  • Bill

    This is good news. I find it so annoying when checking out of Hotels etc and getting stung with a 1.5% surcharge. The establishment is probably getting charged .6% from the bank. As I have explained, when confronted with this, they are profiting from a bank surcharge! Also if I pay with credit card the money goes straight into their account (overnight). No one has to leave work to deposit cash in the bank or deposit cheques. All the work is already done. We also do not charge extra when our customers pay with credit card.