Excessive surcharges on credit card banned

It is now illegal for businesses to charge more than the amount it costs them to take card payments — about 1.5 per cent for a Visa or Mastercard, or just 0.5 per cent for a debit card.


The excessive surcharging ban has applied to large businesses since 1st of September last year.

The purpose of the ban is to stop payment surcharges that are more than the actual cost of accepting that payment method. The cost to a business of accepting each payment method is also known as the ‘cost of acceptance’ for that method.

A payment surcharge is considered excessive if it exceeds the ‘cost of acceptance’. For example, if your cost of acceptance for Visa Credit is 1% you can only surcharge 1% on Visa credit card payments.


What costs are included when working out a surcharge?

If you choose to impose a payment surcharge on a payment method covered by the ban, the amount of the surcharge must not exceed your ‘cost of acceptance’ for that payment method.

Your costs of acceptance are provided to you on a statement from your bank or payment facilitator, typically shown as a percentage figure amount. To help businesses figure out what is “excessive” banks have had to tell their business customers what they are being charged to accept credit card and debit payments in percentage terms.

For most businesses, the fees include:

  • merchant service fees
  • fees paid for the rental and maintenance of payment card terminals
  • any other fees incurred in processing card transactions, including cross-border transaction fees, switching fees, and fraud related chargeback fees (but not the cost of any actual chargebacks).

How to work out your “cost of acceptance”




The ACCC is enforcing the ban and will be able to issue fines of $2,500 for sole traders that breach the rules, $12,000 for proprietary limited companies, or $120,000 for an ASX-listed company. For more serious breaches it can seek penalties of up to $1.3 million from a court.

Michael Schaper, deputy chair of the Australian Competition and Consumer and Commission says “Our message to business is that you are not allowed to add on any of your own internal costs when calculating what surcharge you will charge customers.”

More information

More information is available from your bank and the Reserve Bank of Australia: www.rba.gov.au.

You can read more about the law and your obligations on our website: www.accc.gov.au/surcharges.

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Sara Harrington

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