The Competition and Consumer Amendment (Payment Surcharges) Bill 2015 (Cth) was passed by the Senate on 22 February 2016, and once enacted will amend the Competition and Consumer Act 2010 (Cth) to establish a legislative and regulatory framework to ban excessive payment surcharges, including those imposed for payment by credit card.
Currently, excessive surcharging by merchants may be prevented under contractual arrangements between payment systems and merchants, but are not banned by law. The Bill is, in part, the Government's response to the concern raised in the Financial System Inquiry that certain surcharges being imposed were at times far in excess of what could be fairly considered to be the costs to merchants of accepting cards. The Financial System Inquiry Report noted that providing clearer surcharging limits can improve the efficiency of the payments system by providing accurate price signals to customers, helping them to understand the costs of competing payment methods.
Payment surcharges will be permitted if covered by a Reserve Bank standard or regulations made for the purposes of the ban. The Bill defines a "payment surcharge" as:
- An amount charged, in addition to the price of the goods or services, for processing payment for the goods or services; or
- An amount (however described) charged for using one payment rather than another.
According to the Explanatory Memorandum, if charges are described as "booking", "service", or "transaction" fees are in substance imposed as a result of the payment being made by card rather than an alternative payment method such as cash or direct debit, they are intended to be caught by the ban. On the other hand, additional fees are not intended to be caught if they are applied equally regardless of payment method used, and do not purport to be for the purpose of compensating for the cost of payment acceptance (although such fees will remain subject to other consumer protection action, e.g. if they breach misleading and deceptive conduct provisions).
The ACCC will be the primary enforcement agency for the ban on excessive surcharges, and will have additional powers to gather information and issue infringement notices in enforcing the ban. Penalties will be up to $180,000 for listed corporations and $10,800 for bodies corporate other than listed corporations.
With the new laws expected to come into force on 1 July 2016, we recommend all affected businesses take the opportunity to review their current payment surcharges to ensure they are limited to the reasonable costs of accepting the particular payment method.