Small business owners now risk substantial fines if they are a caught loading excessive surcharges onto credit and debit card payments. Big businesses have faced penalties since last September.

In February this year, the Competition and Consumer Amendment (Payment Surcharges) Bill passed through the Senate and came into full effect on 1 September 2017 which now brings small businesses under the amendment.

The Australian Competition and Consumer Commission (ACCC) is responsible for enforcing the new regulations whilst the Reserve Bank of Australia (RBA) will determine the standards relating to surcharges.

What is reasonable?

As a guide the RBA advises that the costs to merchants of accepting payments by credit card is about 1 – 1.5%, by debit cards is about 0.5% and for Amex cards about 2 – 3%. However, some merchants may be higher. The RBA states that, “Any surcharge that a merchant chooses to levy must be specified as a percentage of the transaction value or, if set as a fixed amount, must not be exceed the cost of acceptance for the relevant transaction value.”

Deputy Chair of the ACCC Michael Schaper states, “You are not allowed to add on any of your internal costs when calculating what surcharges you will charge customers.” He also states that, “The ACCC is not lying awake worrying about every coffee shop in the country. Our priority for these are large, systemic issues affecting large numbers of businesses.”