What does this news about credit card surcharges really mean?
We’ve all been there – you find an unbeatable deal on flights or accommodation only to find a surcharge at checkout that throws your budget and leads to frustration.
In a bid to not only encourage electronic transactions, but to also provide greater protection for Australian consumers, the Senate has this week passed the Competition and Consumer Amendment (Payment Surcharges) Bill 2015 (Cth).
The Bill will mean credit card surcharges will drop dramatically – perhaps to less than a dollar per transaction.
What are the changes to be implemented by the Bill?
The Bill amends the Competition and Consumer Act 2010 (Cth) by:
(a) placing a ban on merchants overcharging on surcharges when consumers use their credit cards;
(b) gives the Reserve Bank of Australia the right to set benchmarks for surcharges; and
(c) allows the ACCC to take actions against corporations that are involved in excessive surcharging.
What is overcharging?
The Reserve Bank of Australia has been given the power and duty under the Senate’s new Bill to set the benchmark for appropriate fees and essentially “define” surcharges. They have already estimated that it will cost companies an average of around 82 cents per transaction, which is considerably less that what is currently charged by a large majority of merchants.
Once these benchmarks are in place, a surcharge will be considered excessive if it exceeds the amount allowable to charge for that type of transaction. If a company is found not to have played by the rules, it could result in an infringement notice of around $100,000 from the ACCC.
We will be keeping our ears out for more information in the coming months with the changes set to come in to place around 1 July 2016.