Surcharging

On 1 September 2017 the rules are changing for all merchants that surcharge customers who pay by card.As a merchant, you retain the right to charge an extra fee (surcharge) to customers paying by card. Under the new rules this surcharge is limited to the amount it costs you to accept that type of card for that transaction. Essentially, from September you can’t apply a surcharge that is more than it costs you to process the transaction.

The new rules apply to payment surcharges for six card systems – eftpos, Debit Mastercard, Mastercard Credit, Visa Debit, Visa Credit and the American Express companion card system.

Your  monthly statements, issued in early each month, will include two tables which show how much you are being charged to process payments for the different card types. One table will show you your monthly ‘Cost of Accepting Card Payments’ and the other table will show your average annual ‘Cost of Accepting Card Payments’ by card type.

Any surcharge you apply to card payments cannot exceed your average annual cost of acceptance. Your rates, for year 2016-2017 can be used for determining this cost and ensuring your surcharges are not excessive.  If you accept American Express, you will need to refer to your American Express statement to see your ‘Cost of Acceptance’.

The amount shown is the maximum percentage surcharge you will be able to apply to a customer’s transaction if they pay by card. If you wish to surcharge customers more than this amount, you’ll need to provide proof of how you incurred those additional costs, or potentially face a fine.

The ‘Cost of Accepting Card Payments’ table will take into consideration all fees charged on your main merchant statement.

Some FAQs include…

Can I continue to charge a fixed dollar surcharge for card payments?

Surcharges must be percentage based or, if expressed as a fixed amount, must not be excessive for any relevant transaction amount. It is up to you to determine if a fixed dollar amount is suitable for your circumstances.

How often will I have to review the surcharge?

The new rules permit you to validate your payment costs once a year, and set your surcharge for the next year based on that information. You will need to review your surcharge by 1 September 2017 and next in July 2018.

What evidence may the ACCC request when investigating my surcharge rates?

The ACCC can require you or Westpac to provide information evidencing the amount of a payment surcharge and the cost of processing the relevant payment.  A merchant wishing to rely on a simple statement of acceptance costs will be able to rely on the annual statement provided by Westpac for a year after it is issued. You would need to be able to provide invoices, contracts or statements if you want to include additional eligible costs in case of investigation by the ACCC.

Where else can I find information about surcharging?

The Reserve Bank of Australia has provided an extensive list of questions and answers on their public website.  The ACCC has provided compliance information and examples on their public website.

If you have other questions about surcharging that are not covered above then please complete a Merchant Support Ticket.

Please note:  SQID cannot provide legal advice and if you have concerns or questions of a legal nature then we recommend you seek assistance from you own legal advisors.