From 1 September 2017, the ACCC will be coming for Australia’s small businesses too. Soon, small businesses who overcharge their customers for card payments will also face penalties. New rules set out by the Reserve Bank of Australia (RBA) mean they’ll need to show evidence their charges are reasonable. So, it’s time to start preparing.
Only got a minute? Here’s what you need to know:
✓ Small businesses will face penalties for excessive surcharges from September 2017
✓ Surcharges must not exceed the costs of processing payment under new rules
✓ Ban only applies to EFTPOS, MasterCard, Visa and American Express “companion cards” transactions
✓ Small businesses should review their charges now to avoid penalties
✓ Smartpay makes it easier to work out your costs as you pay a simple blended rate
What is considered excessive?
Now, there’s no need to worry that your business will be left to bear extra costs. The new standard set by the RBA isn’t intended to prevent businesses from recouping their costs of processing payments. Instead, the onus will fall on small businesses to ensure their surcharges don’t exceed the actual costs of accepting a payment. This means some careful calculations need to be made to avoid falling foul of the new laws.
How to work out “cost of acceptance”
With the ban on excessive surcharges coming into effect in less than two months, now is a great time for small businesses to start reviewing their charges.
First, let’s look at the fees which can be included in your surcharges:
- Bank charges such as merchant service fees
- Fees for rental of payment terminals
- Gateway fees to a payment service provider
- Fraud prevention fees
- Fees or premiums to insure against ‘forward delivery risk’
These charges will make up the total cost of acceptance for each payment type which can be legally passed on to customers via a surcharge. You’ll need to have statements and invoices to verify your costs.
Once you know your costs overall, you’ll need to consider how you’ll apply a fair surcharge for every transaction. You can have one simple surcharge across multiple payment methods however you’ll need to set it at the lowest level so you’re never recovering more than your costs on any particular transaction.
Get more information from the ACCC on how to calculate an acceptable surcharge.
TIP: Since 1 June 2017, banks have been required to send monthly and annual statements which set out the costs of acceptance for each card scheme as a percentage figure amount. The fees typically include merchant service fees but might include other processing fees.