Say goodbye to over-the-top credit card surcharge fees
From today, exorbitant fees on credit card transactions are out. Finito.
The ban on massive payment surcharges kicks in today, all part of the Australian Competition and Consumer Commission’s plan to bring surcharges back to a reasonable level for consumers.
As a result, all domestic airlines have now reduced their credit card surcharges. And there are reports that event ticketing agencies are scrapping them completely.
The second stage of the ban, that will affect all remaining businesses, comes into force on the 1 September 2017.
The new rules come into force immediately. Businesses face fines of fines of $1.1 million per offence.
Australian Competition and Consumer Commission chairman Rod Sims said the new law limits the amount a large business can charge customers for use of payment methods such as most credit and debit cards.
“Businesses can only pass on the permitted costs of the payment method such as bank fees and terminal costs,” Mr Sims said.
“The new law has caused many large businesses to review their pricing practices. We expect to see a move from flat-fee surcharges for purchasing items like flights, towards percentage-based or capped surcharges.”
The new law at this stage only applies to large businesses.
These are businesses that have gross revenue of $25 million or more, gross assets worth $12.5 million or more, or with 50 or more employees.
It will apply to all businesses from 1 September 2017.
According to the ACCC, costs to merchants of accepting payments by debit cards is in the order of 0.5 per cent.
By credit cards, it is 1-1.5 per cent and for American Express cards it is 2-3 per cent.
Businesses will still be allowed to charge other fees, such as “booking fees” or “service fees”. These apply regardless of the method of payment.
That said, they still have to comply with Australian Consumer Law in terms of ensuring the disclosure of any such fees is upfront and clear.
by Leon Gettler, September 1st 2016
