Credit card relief ahead of Christmas
WITH Christmas spending just about to start, it's good news that from tomorrow businesses can no longer add something on top for purchases where an EFTPOS or credit card is used.
The Australian Competition and Consumer Commission has decreed that every business will be banned from charging customers excessive surcharges for using certain types of EFTPOS, Mastercard, Visa and American Express cards to make payments.
The ban relates to businesses based in Australia or using an Australian bank.
The ACCC advice states the ban restricts the amount a business can charge customers for using an EFTPOS (debit and prepaid), MasterCard (credit, debit and prepaid), Visa (credit, debit and prepaid) and American Express cards issued by Australian banks.
Payment types that are not covered by the ban include BPAY, PayPal, Diners Club cards, American Express cards issued directly by American Express, cash and cheques.
"The good news for consumers is that businesses can now only surcharge what it actually costs them to process card payments, including bank fees and terminal costs," ACCC deputy chair Dr Michael Schaper said.
"For example, if a business's cost of acceptance for Visa Credit is 1.5%, consumers can only be charged a surcharge of 1.5% on payments made using a Visa credit card.
"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.
"The only costs businesses can include are external costs charged to you by your financial provider."
Where a business wants to set a single surcharge across multiple payment methods, it must be set at the level of the lowest cost method, not an average.
So, if a business's cost of acceptance for Visa Debit is 1%, for Visa Credit is 1.5%, and for American Express is 2.5%, the single surcharge would be 1% as that is the lowest of all payment methods.
"Our advice for businesses wanting to set a single surcharge regardless of the type of card their customers use is it must be the lowest of all the payment methods," Dr Schaper said.
"You can't use an average of all payment methods or you will land yourself in trouble."