Business owners: beware of changes to debit and credit card surcharges
The Australian Competition and Consumer Commission (ACCC) has announced that from 1 September 2016 businesses will only be able to charge customers the actual cost of using a debit or credit card.
Currently businesses are able to implement surcharges for the use of debit and credit cards, surcharges that are higher than what the business is being charged for access to the card, but this is all about to change. The ACCC has announced that it is removing excessive surcharges to stop businesses that have been exploiting customers.
The changes include a new definition of the “cost of card acceptance” fee. This will place a limit on fees that can be charged, while providing new categories for fees. Categories include the fees paid to a merchant’s acquirer, fees paid to other payment facilitators, and costs paid to third parties to be able to access other types of cards.
Not all businesses will need to change their fees, but business owners will now become more aware of the fees they are charged. This is through an introduction by the Reserve Bank of Australia (RBA) of annual statements that must be provided to businesses from payment facilitators, outlining the average cost of card acceptance for each of the different card payment systems. These statements will be provided to business owners as a percentage, not a fixed amount.
The changes mean that the ACCC will be continually investigating any cases that involve excessive card surcharges. With the RBA presenting a standard surcharge limit that no industry is able to exceed. The new standard will apply to EFTPOS, Debit MasterCard, MasterCard Credit, Visa Debit, Visa Credit and American Express cards issued by Australian banks.
This will not impact booking fees or service fees, and it certainly won’t remove card surcharges. Businesses who opt to have a standard fee used over all Debit and Credit cards can continue to charge under a single rate, however this will have to equal the lowest applicable card rate that is within the group.
These changes come into affect over the next fifteen months, with only large businesses with a consolidated gross revenue of $25 million or more, consolidated gross assets of $12.5 million or more, or who employ at least 50 employees having to adjust their surcharges on 1 September, 2016. For all other businesses there is more than a year to understand the new surcharge limits as changes will not be placed until 1 September 2017.
Remember: As with all changes in your business, it is better to understand the impacts before they are being taken from your pocket. Contact your payment provider for information on when the statements will be available for you to view, and contact Pepperell & Associates to understand how these changes will be reflected in your business revenue.