On 22 February 2016 the Competition and Consumer Amendment (Payment Surcharges) Bill 2016 was passed by the Commonwealth Parliament to establish a legislative framework banning surcharges imposed in respect of particular payment methods that exceed the cost of accepting those payment methods.

The bill will prohibit excessive payment surcharges that are imposed in addition to the price of the good or service for the purpose of processing payments or for using one payment method rather than another. Surcharges will be excessive if, and only if, the additional charge exceeds a level for surcharging permitted under either a Reserve Bank standard or as set out in the regulations.

Importantly, the legislation is limited to surcharges that are imposed as a result of a particular payment method, such that additional fees which do not compensate for the cost of payment acceptance and are applied equally regardless of payment method used are not caught by these amendments.

The Australian Competition and Consumer Commission (ACCC) is the primary agency responsible for enforcing the ban on excessive payment surcharging, with powers to compulsorily collect information and documents from those involved in the payment process and authority to issue infringement notices that carry a penalty of $108,000 per contravention against those alleged to have engaged in the practice of excessive payment surcharging.

With the amendments expected to take effect from mid-2016, the Reserve Bank has indicated that it will undergo a consultation process in order to develop appropriate surcharging standards for the purpose of this law.

What you need to do now

You should ensure that your fee policies strictly comply with these new amendments.

If your business imposes a surcharge for using a particular payment method, such as card payment fees, you should ensure that these fees do not exceed the level for surcharging permitted under the relevant Reserve Bank standard or regulation.