Credit card fees can no longer be excessive

Big business can now only charge a customer what it costs to process a customer’s payment. Picture: Anita McInnes

YANCHEP and Gingin customers need to be aware there is a new law limiting the amount a big business can charge them for using most credit and debit cards.

On February 25 this year the Competition and Consumer Amendment (Payment Surcharges) Act 2016 became law banning excessive payment surcharges and providing new powers for the The Australian Competition and Consumer Commission.

The ban is found in the CCA, and operates in conjunction with a Reserve Bank of Australia standard.

The purpose of the ban is to stop businesses from charging payment surcharges that are excessive – that is, from charging a customer more than what it costs the business to process the payment.

The Australian Competition and Consumer Commission chairman Rod Sims said large businesses could now only pass on to customers what it cost them to process a payment, for example bank fees and terminal costs.   Mr Sims said a large business was one that met at least two of the following criteria:

  • gross revenue of $25 million or more
  • gross assets worth $12.5 million or more
  • 50 or more employees.

The Reserve Bank of Australia has indicated, as a guide, that the costs to businesses of accepting payments by debit cards is 0.5 per cent, by credit card is 1 to1.5 per cent and for American Express cards issued by Australian banks it is 2 to 3 per cent – though some businesses’ costs might be higher than these indicative figures.   “While the ban currently only applies to large businesses, it will apply to all businesses from 1 September 1, 2017,’’ Mr Sims said.

So now was a good time  for all businesses to start reviewing their payment charging methods to ensure they would be in line with the new law.

He said the commission had been raising awareness of the ban, including engaging with many large businesses to ensure they were aware of their obligations.

Consumers who believe they have been charged an excessive surcharge can contact the ACCC at

“We will be enforcing these new rules from September1, and the ACCC encourages all large businesses that haven’t already to ensure their payment charging methods are in line with the new law,” Mr Sims said.

“It is important to note that businesses can still charge other fees, such as ‘booking fees’ or ‘service fees’ which apply regardless of the method of payment.

“In doing so, those businesses must still comply with the Australian Consumer Law in terms of ensuring the disclosure of any such fees is upfront and clear.

“Passing on the cost of processing debit and credit card payments is not mandatory for businesses.

Indeed, the ban has no effect on businesses that choose not to impose a payment surcharge.

The ACCC has published online guidance material for consumers and businesses at

Payments not covered by the ban include BPAY, PayPal, Diners Club cards, American Express cards issued directly by American Express, cash and cheques.