Small business balks at new RBA surcharge regulations

The Reserve Bank has cracked down on businesses charging too much for customers using EFTPOS and credit card facilities, saying it will stop businesses charging anything other than a “reasonable cost”.

But small business advocates say the cost of operating EFTPOS and credit card terminals is more than just the transaction fees, saying infrastructure and time costs all affect productivity.

“It’s everything associated with the operation of these terminals,” Council of Small Business Australia chief executive Peter Strong told SmartCompany this morning.

“It’s not just the transaction cost, it’s operating the terminals, training the staff to use them, and then if everybody is paying through one, there’s the time factor as well. It adds up.”

Australian Retailers Association executive director Russell Zimmerman told SmartCompany he thinks that while it’s reasonable surcharges be kept to a minimum, the changes will still frustrate small businesses.

“There are a range of reasons why you may want to include a surcharge. That could be equipment, software, and even training of staff.”

“I understand the RBA’s issue in that there may be businesses charging a greater figure than they possibly should be.

The RBA warned earlier in the year about the new payment standards and they will come into effect from January 1, 2013. At that time, the RBA says businesses will only be able to charge customers a “reasonable cost of card acceptance”.

However, there is some hope. The RBA has given some guidelines as to what constitutes a “reasonable charge”, and says in its guidelines that it won’t allow card scheme rules to limit surcharges from recovering costs.

In fact, the guidelines say surcharges could include the cost to the merchant of the card transaction in relation to fees incurred, the average cost to the merchant of acceptance of all credit card types, and the average cost of a subset of credit cards.

There is no single dollar amount given that constitutes a “reasonable surcharge”. Zimmerman says this can be a hard figure to come up with, but notes the bigger problem is that retailers are now charged with the burden of proof.

“This is the main concern for me, the fact the retailer has to come back and say they’re surcharging 10%, and then have a burden of proof to show that it’s a reasonable amount.”

“There are a range of reasons why you would want to include a surcharge, and I don’t think it’s good to have that burden of proof on the business.”

Strong says the RBA needs to speak with the banks about their surcharge policies if it intends on making SMEs adhere to new rules.

“I think that what the RBA is doing is fine, but then they have to go and talk to the banks about making it easier for small business.”

“It isn’t just the cost. It’s everything else associated with the payment method that makes up a surcharge.”

Visa has already announced its support for the RBA’s decision to limit card surcharges.


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