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.