For most of our lives, we haven’t paid close attention to card surcharges. But they’ve become very flavour-of-the-month due to the percentage charged by some businesses slowly creeping up. So what’s the deal with card surcharges and are they … legal?
Why do businesses charge a card surcharge?
A business will charge the customer a surcharge when using a card to cover the costs of using that type of payment.
Paul Zahra, CEO of the Australian Retailers Association said that many businesses in 2024 have chosen to pass on the surcharges, where they might’ve previously absorbed them.
“[Businesses] are now not able to do so due to rapidly rising costs across the board, from rising rents, labour, utilities, insurances, and materials,” he said per The Sydney Morning Herald.
How much is a card surcharge?
It depends.
According to the ACCC (Australian Competition & Consumer Commission) which is tasked with promoting fair trading between businesses and consumers, the surcharge “must not be more than what it costs the business to use that payment type”.
On its website, the Commission lays out an estimate for what a transaction on all the major card payment types would cost the business:
- Eftpos: less than 0.5%
- Visa and Mastercard debit: between 0.5% and 1%
- Visa and Mastercard credit: between 1% and 1.5%.
So yes, technically it’s a small cost. But as Swinburne University Professor of Business Steve Worthington points out, it could be the beginning of a very slippery slope.
“My fear is that we’ll end up paying another charge for their electricity and their water as well, which to me is distinctly unfair,” Worthington told Nine.
What if I don’t use Eftpos, Visa or Mastercard?
Eftpos, Visa and Mastercard surcharges are all regulated by government legislation.
There are, however, a number of payment types that are immune from rules regarding the ban on excessive payments.
- BPAY
- PayPal
- Diners Club
- American Express cards issued directly by American Express
- taxi fares, whatever the payment type.
All of the above payment types are essentially free to surcharge what they wish.
What if a business doesn’t take cash?
Good news! If a business doesn’t take cash, they cannot legally surcharge you for using a card payment.
The exception to this is if a cafe, for example, displays the surcharge price clearly on its signage.
Can I report a business for charging an excessive surcharge?
You can.
Consumers are entitled to make a report to the ACCC via their website.
So there you go.
