Small firms risk fines for big card fees

The West Australian, Phoebe Wearne, Canberra, Thursday, 31 August 2017

Small businesses risk being fined thousands of dollars if they are caught slugging their customers exorbitant surcharges for using EFTPOS or credit cards to pay for purchases from Friday.

The Australian Competition and Consumer Commission, which has been given new powers to enforce the rules, says they will affect billions of transactions a year.

The same excessive surcharging ban has been in place for big businesses since last September but it is being extended to small retailers, who are no longer allowed to charge more in surcharges than what it actually costs them to accept payments made through EFTPOS, Visa, Mastercard or American Express cards issued by banks.

Average credit card holder has just over $3100 in outstanding purchases.

The change may force smaller retailers to rethink charging flat fees for customers who make payments by card.

They will no longer be allowed to slap a 50¢ surcharge on low-cost items such as a $4 coffee.

“Our message to business is that you are not allowed to add on any of your own internal costs when calculating what surcharge you will charge customers,” ACCC deputy chairman Michael Schaper said.

“For example, if a business’ cost of acceptance for Visa credit is 1.5 per cent, consumers can only be charged a surcharge of 1.5 per cent on payments made using a Visa credit card.”

Online credit card fraud has soared with more than $400 million stolen last year

The cost of accepting card payments varies, but merchants typically pay their banks about 0.5 per cent of the transaction’s value for debit card payments, one to 1.5 per cent for Visa and Mastercard payments and 2 to 3 per cent for American Express cards.

If the ACCC determines a business has breached the new rules, it will be able to issue fines of $2500 for sole traders, $12,000 for proprietary limited companies or $120,000 for an ASX-listed company.

More serious breaches could land a business in court, where the ACCC can seek penalties of up to $1.3 million.