New Australia rules banning businesses from charging excessive payments on credit, debit, and other payments have become law, as discussed in our August 2016 Alert. Initially the ban applied only to large businesses. Effective September 2017, the ban applied to all businesses based in Australia or using an Australian bank.
In an early enforcement action, on November 17, 2017, the Australian Competition and Consumer Commission (ACCC) announced that one business, Red Balloon Pty Ltd, has paid penalties of $43,200 in relation to four infringement notices for charging excessive payment charges. It appears that the ACCC is moving from an educative and informative phase to a stronger enforcement role.
Excessive Payment Charges
The ban requires that businesses can only pass on to consumers an external charge that the business actually incurs to process payments such as bank fees and terminal costs. Importantly, businesses are prohibited for passing on any of their internal costs as part of the surcharge.
The ACCC is responsible for enforcement of the ban and can issue fines of $2,500 for sole traders, $12,000 for proprietary limited companies, and $120,000 for an ASX-listed company. For more serious breaches, the ACCC can seek penalties of up to $1.3 million from a court.
Businesses that accept credit or debit cards should evaluate whether they have sufficient documentation to support the charge as based only on external costs (any costs passed on must not include any internal costing). Businesses that are concerned that any or all of their charging practices may not be compliant with the ban should consider approaching the ACCC rather than waiting for this enforcer to knock at the door. Businesses that continue to impose excessive charges are at significant risk of a fine and adverse publicity.