On 1 September 2017 the rules around surcharges for card payments changed. The new rules set out by the Reserve Bank of Australia (RBA) means businesses need to be able to show evidence their charges are reasonable.
Here’s what you need to know in a minute:
✓ Businesses face penalties for excessive surcharges
✓ Surcharges must not exceed the costs of processing payment under the new rules
✓ Ban only applies to EFTPOS, MasterCard, Visa and American Express “companion cards” transactions
✓ Businesses should review their charges now to avoid penalties.
✓ Smartpay makes it easier to work out your costs as you pay a simple flat rate
What is considered excessive?
The new standard set by the RBA was not intended to prevent businesses from recouping their costs of the processing card payments, instead it was to ensure that a business’s surcharge does not exceed the actual cost of accepting the payment. This means that there needs to be some care taken in calculating surcharges to avoid breaching the law.
How to work out “cost of acceptance”
With the ban on excessive surcharges now in effect, it is a great time for 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 overall costs, 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