Competitions and Consumer Amendment (Payment Surcharges) Act 2016

An amendment to the Competitions and Consumer Act 2010 (Cth) was recently commenced on 25 February 2016. The amendment is called the Competitions and Consumer Amendment (Payment Surcharges) Act 2016. The primary objective of the amendment is to regulate the cost of payment surcharges when using a Credit or Debit card.

The use of payment via debit or credit card currently assumes two thirds of all non-cash payments in Australia. This amendment will ensure that payment surcharges are not excessive and that they accurately reflect the cost of using the payment method.

The amendment was implemented as a result of the findings from the Reserve Bank’s Consultation Paper called Review of Card Payment Regulations, which was issued in December 2015.

Under the Act a payment surcharge is defined as “an amount charged in addition to the amount paid for the goods or services.” A business or individual person charging a payment surcharge must ensure that their payment surcharge does not exceed the Reserve Bank’s Standards. The Reserve Bank are currently establishing a new standard that will regulate payment surcharges. A draft version of this Standard is available in their December 2015 Consultation Paper.

Under the Act the Australian Competition and Consumer Commission (‘the Commission’) may request a record of any business or induvial person’s payment surcharge fees. They may request evidence of compliance with the Reserve Bank Standards.

If the Commission’s findings prove that a business or an individual have been charging an excessive payment surcharge they will be issued with an infringement notice. The maximum penalty for a corporation is $70,680.00, a body corporate can face a maximum fine of $7,068.00, and the maximum penalty for an individual is $1,413.60.

A person will have 28 days to comply with this infringement notice and pay the according fine. If this infringement notice is not complied with within the timeframe the Court may order a financial penalty. If a business or person believe they have not been charging excessive payments they can apply in writing to the Commission for the withdrawal of the infringement notice.

What should Businesses do to ensure their compliance with the Amendment?

All businesses should undertake a payment surcharge check by ensuring that their Credit and Debit Card surcharges are not excessive and reasonably reflect the cost of the transaction.

All businesses should be on watch for the Reserve Bank payment surcharge standards and ensure they comply with the amounts specified in these standards when it is released.