Reserve Bank announces new rules for card payments

JOHN CONROY
MAY 26, 2016
THE AUSTRALIAN
Retailers will no longer be able to slug customers with excessive surcharges on credit and debit card payments under new rules set out by the Reserve Bank.
From September 1, surcharges will be limited to the amount it costs the retailer to accept a card for a transaction.
“Merchants will not be able to impose high fixed-amount surcharges on low-value transactions, as has been typical for airlines,” the RBA said.
The new limits will be linked to the direct costs of the payment method, such as bank fees and terminal costs.
The changes will apply to ‘large merchants’ — those with revenue of more than $25 million — this year and will come into effect for all other merchants on September 1 next year.
The new surcharging law arose out of a recommendation in the final report of the Financial System Inquiry which was released late 2014. The objective of the new rules is to improve the efficiency and effectiveness of price signals and reduce the potential for cross-subsidisation between customer groups and merchant groups.
The Australian Competition and Consumer Commission has said that it will enforce the changes.
“The ACCC is finalising online guidance material for consumers and businesses, which will provide further information on the ACCC’s enforcement role, what businesses need to do in order to comply, and how consumers can make complaints if they believe a business has charged a payment surcharge that is excessive,” the watchdog’s chairman, Rod Sims, said.
“We will focus on education and awareness in the early stages but won’t turn a blind eye to possible breaches, particularly for those large businesses clearly on notice of these changes.”
The ban has no effect on businesses that choose not to impose a payment surcharge, such as the many businesses in Australia that incorporate payment system costs into their overall prices, the ACCC said.