November 13, 2017

From 1 September 2017, all businesses within Australia are prohibited from charging their customers excessive surcharges for payments made with major debit and credit cards including EFTPOS, Visa, Mastercard and American Express cards.

This is a great win for consumers, however, if you or someone you know are a business owner and have not put in place appropriate measures to ensure compliance with the new surcharge regime, it is time to review your practice and, if required, act or face the possibility of being hit with substantial fines.

What is the new regime for payment surcharges?

The Competition and Consumer Amendment Act (Payment Surcharges) Act 2016 (Cth) inserted a new Part IVC into the Competition and Consumer Act 2010 (Cth) (Act) establishing a new regime governing payment surcharges.

The effect of the payment surcharge regime is to cap the amount that businesses can charge consumers for using different payment methods such as debit cards, credit cards (Visa and Mastercard) and Australian bank-issued American Express cards.

The cap on surcharges is set by a Standard developed by the Reserve Bank of Australia (RBA).

When Did the new payment surcharge regime commence?

The amendments to the Act are not new law, with the Act being passed in early 2016 and contemplating a staged rollout of the new payment surcharge regime.

The regime commenced on 1 September 2016 for “large merchants”, being businesses (this can be a company, partnership, sole trader etc.) that meet any two of the following three criteria:

  • consolidated gross revenue of $25 million or more;
  • value of its consolidated gross assets is $12.5 million or more; or
  • employs 50 or more employees.

With effect from 1 September 2017, the payment surcharge regime now applies to all businesses, regardless of structure, turnover, the value of gross assets or number of employees.

Summary of the RBA standard

The RBA released the Standard in May 2016 which sets how businesses may recover costs on different payment methods.

The Act and Standard provides that a payment surcharge will be “excessive” if it exceeds the “permitted surcharge”. The permitted surcharge is the amount that it costs a business to process the payment (i.e. the amount that the business is charged by its financial provider).

If a business prefers to set a single surcharge amount which applies to more than one payment method, the surcharge must be set according to the level of the lowest cost method (i.e. the business cannot set a payment surcharge that is an average of all the payment methods).

Does the payment surcharge regime apply to all payment methods?


The Act and the Standard do not apply to all payment methods, for example, it does not apply to payment by way of cheque.

The Act and Standard also do not apply to businesses that pass through their cost of payment method in the total costs of goods and services (for example, the total cost includes an amount charged for the payment method used, rather than an additional surcharge).

How will the payment surcharge regime be enforced?

The Act provides the Australian Competition and Consumer Commission (ACCC) with the power to investigate payment surcharges and issue infringement notices.

What are the penalties for breaching the new regime?

The penalties for breaching the payment surcharge regime are significant and vary depending on the entity, but in 2017/2018 financial year the range of penalties are as follows:

  • listed corporations - $126,000;
  • body corporates that are not listed corporations - $12,600; and
  • persons other than body corporates - $2,520.

What is the next step?

The experienced team at McInnes Wilson Lawyers can assist businesses with their compliance with the payment surcharge regime by:

  • advising on the application of the Act and the Standard;
  • reviewing terms and conditions, websites (with online sales capability) and charging practices to ensure they comply with the Act and the Standard;
  • recommending charging methodologies for passing on payment surcharge costs for businesses;
  • seeking reimbursement where a person believes they have been charged an excessive payment surcharge.

If you require assistance with ensuring compliance or have a question about any of the topics covered in this article, contact Principal Chris Davis or Senior Associate Anthea Faherty