Is It Legal For Businesses To Charge Crazy Credit Card Surcharges?

Whenever I pop into a convenient store to get something small, it always a bit of a gamble. Will they or won't they hit me with a $1 surcharge if I pay for a $2 pack of gum with my credit card? It seems a lot of businesses are guilty of making customers cough up money for paying with plastic, but is this practice legal? We find out.

Credit card image from Shutterstock

Recent changes to the Competition And Consumer Act 2010 bans businesses from demanding "a payment surcharge that is excessive". This all came into affect in February and applies to bricks-and-mortar shops as well as online businesses. The definition for "excessive" has been left vague since the Reserve Bank of Australia (RBA) is still drafting the standards and definitions for this.

That doesn't mean businesses can continue to slug customers with credit card surcharges with reckless abandon. At this point, it's a case-by-case kind of situation. The Australian Competition and Consumer Commission (ACCC) now has the power to enforce the law on excessive credit card surcharges. If the ACCC does deem that a company's additional charges to be ridiculous, they can slap down a fine of up to $108,000.

Businesses can spin it any way they want by call it a "booking fee", "service fee" or "transaction fee", but at the end of the day, the law sees them all as "surcharges" so companies can't get away with charging customers extra by being tricky with their words.

So how will all this impact businesses?

According to lawfirm Slater & Gordon:

Businesses that impose surcharges to credit card payments but not other payment methods (such as EFTPOS) will need to ensure that those fees are not excessive. In particular, businesses should review their payment surcharge fees once the Reserve Bank of Australia sets the standards on the amount that can be charged.

The RBA is set to release the standards by the middle of the year so we'll all get more clarity on this topic soon.

Did you just catch yourself wondering if something was legal or not? Let us know and we may be able to answer it in our next Is It Legal? feature.


    So does that mean I can go back to Jetstar and ask for a refund of the $50 Credit Card Fee?

      Amen to that.

      But you know... if the credit card surcharges are the only bad experience you have with your flight with Jetstar, consider yourself lucky.

    i had to pay some strata fees on an investment property through a company called strata max. if i wanted to pay y mastercard or visa it was $12-16 extra on top of the fees. if i wanted to use amex, it was $20.20 extra. i was so pissed off. and there was no direct contact i could talk to about it from the company. it was all phone prompts with no human backup. so angry.

      You didn't say how much the fees were. Visa, Mastercard and Amex charge a percentage of revenue taken, so 1.5% for Visa/Mastercard and 3-5% for AMEX is industry norm. If your strata fees were more than $600, this is an entirely reasonable surcharge.

      However, they should be offering you a method of payment (cash or bank transfer) that allows you to pay the ticket price.

    hey @spandaslui, so i assume if i have already paid with a fee, i can still call the ACCC to complain about it?

    Whenever I pop into a convenient store to get something small, it always a bit of a gamble. Will they or won’t they hit me with a $1 surcharge if I pay for a $2 pack of gum with my credit card?

    I'd be more worried about them charging me $10 for a $2 pack of gum, because convenience stores. How do they get away with being so much more expensive than everyone else?

      You're paying for the convenience, I though that was obvious :P

        But high prices are inconvenient!

      Well if you think of it this way. For those stores to have Credit facilities, that's an expense. They don't get those machines for free, they are charged by the bank for every transaction they do to have the convenience of credit card facilities. Now they happy to have that facility because it makes their customers happy to have the facility. Now when someone pays for a pack of gum for $2.00 and want to use credit card, that's a annoyance for the business because there goes any profit they would make because their fees to pay for the credit card transaction outweigh the cost of the gum pack. Therefore why they have limits on $10.00 minimum purchase for credit card or 2% or more surcharge for credit card transactions. You do get the bad apples with everything such as the banks and other places that put surcharges that are unfair and sometimes get caught out on that.

        I wasn't specifically talking about credit card surcharges.

    So according to that Slater & Gordon excerpt, as long as the shop imposes excessive EFTPOS surcharges, they can also impose excessive credit card surcharges..

    I got charged 10% fee from an ATM in Las Vegas... $30 fee, for taking $300 out.

    She wasn't even that good!

    I hope this is a message 'Umart' will see.
    Hey Umart, 3% credit card fee is bad enough, but you guys should not be charging the same fee on direct bank deposits or any other form of noncredit card fees, you make enough already. You were my goto guys, no more though, no more!

      They don't?

      The internet price is the price you pay if you use direct bank transfer or cheque or savings at pickup.

        If you go through their checkout system and use direct debit, you still get charged 3%. It's still there when you get the email with the charges. Also, their phone service sucks balls, half the time you just get a recorded answer telling you to call back later.

          There's might be a fee for their direct debit / bpay provider - I've never used it. You do have the option of Direct Deposit :

          Direct Deposit/BPAY into UmartOnline account at any Commonwealth Bank-account no 064129 -10215845 and fax a copy of the deposit slip to 07 33690008 with details of the order.
          (Please note: If you deposit by Electronic transfer, please allow 1-2 business days to appear in our account.)

          And yeah, their phone service sucks balls, but in-person isn't much better. It's rare these days not to have to wait in line of about 5 people to pick stuff up. Just the same as with MSY in Melbourne (though I admit I haven't been there in years, but there used to always be a line out the door).

          That's the price you pay by buying from a least-cost provider.

            I've been using direct deposit for years, this 3% fee is new and still shows up on their pay now email. The bugger is though, even with the fee, they are still cheaper than most other places. It's the principle of the thing though.

              Yeah, I agree.

              I do think that's a mistake though.

              I'd email them to clarify if it's a postal order, or just transfer the money without the fee and be prepared to pay the extra via eftpos at the pickup counter.

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