In our latest two articles, we took you through the legal updates affecting how businesses manage their surcharges for card payments. Now that you understand the law, it’s important to draw your attention to how these changes will impact your business from an operational perspective. In this article, we answer nine FAQs about the ban on excessive surcharges and how it applies to businesses in practice.

What is the Purpose of the Ban?

The ban prohibits businesses from charging customers excessive fees when using MasterCard, Eftpos, Visa and American Express. Businesses will only be allowed to pass on to customers what it costs the business to process payments — known as the “cost of acceptance”.

Does the Ban Apply to All Businesses?

From 1 September 2017, the ban will apply to all businesses that charge customers for using MasterCard, Eftpos, Visa and American Express. The ban has applied to large businesses since 1 September 2016 and will extend to all businesses from 1 September 2017, including small businesses.

I Don’t Pass on Fees to my Customers for Using Card Payments. Does the Ban Still Affect Me?

The ban applies to businesses that choose to pass on a surcharge fee to their customers for accepting the payment methods listed above. It is not compulsory to pass on these fees and businesses have a few options here. For example, businesses can:

  • absorb the fees in the price of their goods or services; or  
  • cover the fees themselves and not pass them on to their customers in a surcharge or the price of their goods or services.

However, businesses that do not pass on their costs of accepting payments may be absorbing large bank fees which legally can be passed on to a customer.

Can I Apply a Flat Rate Surcharge?

Businesses may choose to impose one flat surcharge rate (as a percentage) for all payments to make it easier to manage their payment processes. However, businesses doing so must ensure that the percentage applied does not exceed the cost of acceptance for any particular transaction.

Can I Apply a Fixed Surcharge Fee?

A business can also choose to apply a fixed fee (in dollars) for all transactions. But, once again, you must ensure that the fixed fee is not excessive for each card transaction.

Can my Business Still Charge a Handling or Processing Fee?

The new laws do not prevent a business from being able to pass on a handling fee or other fees that are unrelated to the payment method used by the customer.  

How Often Should I Review my Surcharge Levels?

Your surcharge levels should be reviewed annually. While the costs you pay may fluctuate from month to month, the RBA Standard has been designed to allow you to review your costs once a year using an annual statement from your bank and other materials.

From 1 June 2017, banks are required to send monthly statements outlining the cost of acceptance for each payment type, expressed as a percentage. You can reset your surcharge levels more frequently using these statements.

You will not be receiving an annual statement or monthly statement for any additional fees that you may also pay on as a surcharge. For these fees, you will need to calculate the permitted surcharge yourself.

What if I’ve Recently Changed Banks or if I’m a New Business?

If you have changed banks within the last 12 months or been trading for less than 12 months, you won’t have an annual statement from your bank for this year. However, the RBA Standard allows you to estimate your permitted cost of acceptance in good faith. Monthly statements can help you to reach a reasonable figure.

How Can LegalVision Help my Business?

To help SMEs comply with the ban, LegalVision is offering a service to make sure your surcharge levels are in order before the new laws come into effect: the Surcharge Checker. For only $99 (ex GST), a LegalVision lawyer will:

  1. review your current surcharge practices;
  2. review your bank materials to determine your surcharge options;
  3. offer you a consultation to discuss your options under the new laws; and
  4. provide you with a certificate confirming your legal surcharge options.


If you have any questions about the ban on excessive surcharges, get in touch with LegalVision’s consumer lawyers today on 1300 544 755 or fill in the form on this page.

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