New standards for payment surcharges

Following the conclusion of its review into card payment regulation this week, the RBA announced three new standards which it says will contribute to a “more efficient and competitive” payments system.

The new surcharging standard will preserve the right of merchants to surcharge for more expensive payment methods. However, consistent with the federal Government’s recent amendments to the Competition and Consumer Act 2010, it will ensure that consumers using payment cards from designated systems (eftpos, the debit and credit systems of MasterCard and Visa, and the American Express companion card system) cannot be surcharged in excess of a merchant’s cost of acceptance for that card system.

Eligible costs are clearly defined in the standard and new transparency requirements will promote compliance with and enforcement under the new framework.

“With the cost of acceptance defined in percentage terms, merchants will not be able to impose high fixed-amount surcharges on low-value transactions, as has been typical for airlines,” a spokesperson for the RBA said. “The ACCC will have enforcement powers under the new framework, which will take effect for large merchants on September 1, 2016 and for other merchants on September 1, 2017.”

The spokesperson said the new interchange standards will result in a reduction in payment costs to merchants, which will place downward pressure on the costs of goods and services for all consumers, regardless of the payment method they use.

Consumer advocate and campaigner Christopher Zinn, who is currently spearheading the Surcharge Free movement, says although the announcement addresses excessive surcharges in many large industries, uncertainties remain around surcharging card payments for smaller everyday consumer purchases.

“Additionally, the RBA guidelines do not engage with consumers’ negative feelings toward surcharging or the detrimental impact the practice can have on customer loyalty and advocacy for businesses of all sizes,” he said.

“Surcharge Free is a new movement that’s launched this week to encourage merchants across Australia to focus on the bigger picture and go a step further than the RBA guidelines by ending payment surcharges altogether. As we’ve seen, businesses of all shapes and sizes are benefitting from their decision to not surcharge customers and, with the cost of acceptance being reduced, the rewards will only increase. Since launching SurchargeFree.com.au on Monday, there’s already been a number of merchants pledging their support to the movement, and following today’s announcement we’re excited to see a lot more.”

A summary of the new regulatory framework is provided in some Q&A on the RBA’s website.

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