Excessive surcharges banned

ACCC Deputy Chair Dr Michael Schaper says that from tomorrow Australian businesses will be banned from hitting customers with excessive surcharges

Excessive surcharges banned

Ross Greenwood:  Welcome back to Money News right around Australia. Well, as I’ve told you several times, tomorrow is September the 1st. The last quarter of the year, but there also is something else because tomorrow every business across Australia is going to be banned from charging customers excessive surcharges, when they’re using certain tap of EFTPOS, MasterCard, Visa, American Express cards when you’re make a payment. Now, we’ve known this has been coming for some time, but now, bingo, the cutoff date is tonight. The ACCC is going to be watching, has been charged to do that. The ACCC, Deputy Chair, Dr. Michael Schaper is on the line right now. Many thanks for your time, Michael.

Interview with Dr Michael Schaper, Deputy Chairman, ACCC

Michael Schaper: Good day, Ross.

Ross Greenwood:  As a business, how will it affect me?

Michael Schaper:  Well, it means that you’re going to probably have to think about what you charge if indeed you do actually charge a specific fee for people using, as you said a credit card, or a debit card, or EFTPOS. And the golden rule is this, you can’t charge customers anything more than what it actually costs you to operate those facilitates.

Ross Greenwood:  Okay. How do I know how much it actually cost me to operate that facility?

Michael Schaper:  Good question and a simple answer. Banks are required to send small businesses a statement, every month saying it’s the percentage while it’s costing you to operate your Visa, your MasterCard, your AmEx, your EFTPOS, whatever it might be. You should be able to take that for you. And then if you want to charge people and you’re not required to, but if you decide you do want to charge the customers then that percentage figure is a maximum that you’ll be allowed to use.

Ross Greenwood:  Is the Reserve Bank Guide a reasonable thing for merchants to us?

Michael Schaper:  It is. Basically you should be relying on the statement you get from your bank rather– The Reserve Bank just put some very general figures of that. Typically funds most surprised you than EFTPOS is, or the pay cost mechanisms than the Visa, MasterCard and then on top of that probably usually AmEx. And it also points out that there are a couple of exclusions from this as well, Ross, which was noting as well.

Ross Greenwood:  What are the exclusions on the way through?

Michael Schaper:  Well, first one if a business, you can’t charge most of your in house cost. It really is just those based that the bank or rather credit card provider charges you. And second one, consumers will probably be a little bit surprise to discover for example the taxes are exempt from this rule, because they were already legislative for under individual state laws.

Ross Greenwood:  Oh, that’s interesting stuff. Okay. Then from the consumers’ point of view, how will I be affected by these changes?

Michael Schaper:  Well, if you are getting charged you should notice in some cases a drop. One of the most obvious one are places where there’s a flat phase. For example, it’s 50 cents to use an EFTPOS or something like that. Probably all in count that. The business now is actually going to have to ask themselves, “I’m charging 50 cents. Is that actually within– When you convert that back into a percentage is that actually one that costing me or am I overcharging?” You might find a number of businesses therefore going, “This is not to get a big complex. Although, I’ll have to just put it back into the overall cost, or I’ll just charge you a percentage of it.”

Ross Greenwood:  Okay. Just another one because I do note that there are businesses, if so, for example, I’ll try and have a minimum transaction on debit cards, credit card transaction. It might be $10 or whatever it might be that will also often charge more if the transaction is under that level. Are all within their rights to do this?

Michael Schaper:  Well, as soon I apply the percentage figure if they’re using it, if it’s a faith to using that particular credit card or whatever might be, there’s nothing wrong in saying, “Okay. Here is the minimum that we require you to spend in order to be able to use a use a credit card, but as the charge in that you’re therefore attach onto it. Again, it’s got to stick within those percentage limits.

Ross Greenwood:  And for those who do the wrong thing, that consumers’ note, that they have done the wrong thing or indeed for companies that do the wrong thing under these circumstances of surcharges, what can the ACCC do?

Michael Schaper:  First thing we can actually ask businesses to give us all the paperwork, and it’s a pretty straightforward mathematical exercise to work out whether or not someone’s charging within the boundaries. It’s not hard at all and warning, it won’t be hard for customers to work that either. Secondly, if we think that it is a serious substantial major issue then you might see us, that we can issue an infringement notices, or we can also ultimately take the matter to court.”

I think Ross, so that we realize that a small business is, of course, must try to do the right thing. Many of them probably still unaware of this new law. We’ll be working with them. Do encourage them. And when businesses are making genuine mistakes, try to show them the way they’re the their ways. I’ve got to say from experience Ross, that it’s not just your customers, you got to also keep an eye at your competitive. We get a lot of phone calls from them too.

Ross Greenwood:  That’s exactly right. There’s no doubt about that. Well, that comes in from tomorrow. Keep an eye on it if you are a consumer. Certainly keep an eye at, if you are a business as well. The Deputy Chair of the ACCC, Dr. Michael Schaper, as always we appreciate your time.

Michael Schaper:  Pleasure, Ross.

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