Card surcharges are banned. Now Aussies are fuming over another charge

In briefConsumers have raised concerns about whether new fees will effectively take the place of card surcharges.Following an RBA review, businesses can no longer charge customers a surcharge for paying by card.

It took just hours for fresh frustrations to emerge after Australia’s card surcharge ban came into effect on Thursday.

Consumers on social media questioned new charges appearing at checkouts online, including some described as “platform” or service fees.

Some said they had encountered the charges in transactions made after new rules came into force preventing businesses from imposing surcharges on credit and debit card payments, prompting questions about whether other fees were effectively taking their place.

The Australian Competition and Consumer Commission (ACCC) told SBS News it was “aware of concerns about businesses introducing fees described as platform, booking or service fees” since the card surcharge ban took effect.

But the regulator said such fees are not necessarily prohibited.

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Whether a charge is a genuine fee for a particular service or amounts to a “card payment surcharge by another name” depends on what it covers and how it operates, an ACCC spokesperson said.

The new rules do not prevent businesses from charging genuine fees for services such as ordering or booking platforms.

However, under Australian Consumer Law, businesses cannot mislead customers about their prices, including the nature or reason for an additional fee or whether it is optional.

Businesses must also display the total minimum price of a product as a single figure, including mandatory fees that can be calculated in advance.

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The card surcharge ban followed a Reserve Bank of Australia (RBA) review into card payment costs and surcharging that found removing them would support a more efficient and competitive payments system.

“When card surcharging ends, the sticker price will be the price that consumers end up paying,” the RBA website explained.

In other words, if an item is advertised at $100, consumers should expect to pay $100 at the checkout with either cash or a card.

‘Teething issues’

Australian Payments Network chief strategy officer Rajat Jain said a “change of this scale is not immune to some teething issues”.

Card networks like Visa and Mastercard, as well as payment service providers, are responsible for administering and enforcing the no-surcharge rules.

Businesses will still have costs associated with processing card payments, but they’re no longer permitted to add them as an extra fee.

Businesses may choose to reflect those costs in their overall pricing.

“Shoppers shouldn’t assume today’s surcharge ban means they’ll now start paying less,” said Sally Tindall, data insights director of financial comparison site Canstar.

“Businesses still have to pay to accept card payments, so some may choose to build those costs into their prices instead.”

For some business owners, the changes have prompted difficult decisions.

David Bitton, owner of the Bitton Rose Bay cafe in Sydney, said more than 90 per cent of his sales are made via card.

With surcharges no longer an option, he estimated the change could cost his business as much as $40,000.

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“So I’ve got to be clever and strategise how I’m gonna pass on that cost, without upsetting people basically,” he told SBS News.

Rather than raising menu prices, Bitton said he’s increasing his weekend surcharge fee from 10 to 12 per cent.

The RBA says the changes only apply to surcharges specifically added for customers paying by card; booking fees, service fees and hospitality surcharges for weekends and public holidays are permitted.

Concerned about a fee you’ve been charged?

Consumers who believe they are still being charged a fee specifically because they paid by card should first seek clarification from the business and ask for the surcharge to be refunded, the ACCC said.

Concerns about ongoing card surcharges can also be raised with the relevant card network or payment service provider.

Jain from the Australian Payments Network said businesses that continue to impose prohibited card surcharges may be directed by their bank or payment provider to remove them and could face penalties.

Meanwhile, concerns about misleading fees or pricing — including a failure to display the total minimum price as a single figure — can be reported to the ACCC or the relevant state or territory consumer protection agency.

The surcharge ban covers EFTPOS, Visa and Mastercard, including credit, debit and prepaid cards.

American Express and UnionPay are also removing surcharges from 1 October, while PayPal’s equivalent change takes effect on 5 October.

The rules generally apply whether the card was issued in Australia or overseas, although individual network rules and exemptions can apply.

The change applies to both online and in-store transactions.

— With reporting by Cameron Carr and Jasmine Kassis

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