From 1 September 2017, new merchant pricing standards will apply to all merchants that accept credit card, debit card and prepaid card payments (Eftpos, MasterCard and Visa cards and AMEX companion cards).
1. New ban takes effect for all merchants from 1 September 2017
New laws that ban excessive payment surcharges by merchants will apply to all merchants from 1 September 2017. Large merchants are already subject to the ban and should already be compliant but may not be (i.e. merchants where at least (2) of the following apply: (i) turnover >$25M (ii) assets > $25M or (iii) > 50 employees). A Q&A sheet issued by the RBA can be found here.
2. Maximum permitted surcharge
Under the new rules, if a merchant chooses to impose a surcharge on a payment type, the surcharge (based on the transaction amount) must be no more than the merchant’s own annualised cost of accepting that payment type, (i.e. the amount charged by its own bank). That is, if for example the annualised cost of accepting MasterCard Credit payments is 1.5%, and the cost of accepting Visa debit payments is 0.8%, the maximum surcharge for a $10 transaction is $0.15 for MasterCard and $0.08 for Visa debit. The annualised cost amount must be reviewed by the bank on an annual basis. To assist the merchant, its bank has an obligation to provide an annual statement that clearly sets out such costs.
3. Enforcement and penalties
The ACCC has been given new powers to enforce the ban against merchants including issuing information and/or infringement notices and/or seeking significant pecuniary penalties in civil proceedings for each contravention.
4. Next steps and how we can assist
Merchants are being urged by regulators to take steps to understand what their obligations are if they choose to impose surcharges on payments from their customers. As you are likely aware, this has been a major issue within the consumer landscape including the subject of some 5000 submissions to the Financial System Inquiry and the focus of much media in recent months.
The HWL Ebsworth Financial Services & Regulatory team has assisted a number of merchants across banking, billing services, retail, wholesale, manufacturing, property management, travel agents, accommodation, airlines, franchising and more. We can assist with advice to merchants on their rights and obligations under the new laws.