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It has been over 5 years since the excessive payment surcharge laws were introduced but the ACCC’s recent action against Nine Entertainment Co (Nine) demonstrates that the ACCC will continue to enforce this law with vigour.
Businesses that charge customers a surcharge on card payments should ensure they are in compliance with the law to avoid infringement notices, redress payments and reputational harm.
On 25 February 2016, new laws banning excessive payment surcharges were introduced into the Competition and Consumer Act 2010 (CCA).
The law relates to charges imposed by a merchant for processing a payment (above the price of goods or services) or for using one payment method over another. Such charges will be excessive if they exceed permitted surcharges set by the Reserve Bank (where applicable) or the actual cost to the merchant of processing the payment.
The ACCC alleged that, between August and December 2020, surcharges where paid by consumers and advertisers in relation to subscription or advertising services provided by six Nine entities.
Payments made using MasterCard and Visa credit and debit cards attracted surcharges in the range of 0.9 and 1.55 per cent. Such surcharges were alleged to have exceeded the cost to Nine for processing the payments by between 0.09 and 0.84 per cent.
Rather than commencing legal proceedings against Nine, the ACCC issued 12 infringement notices for the conduct totaling $159,840.00.
In addition to paying this penalty, Nine will spend around $450,000.00 in redress payments for approximately 220,000 consumers in the form of either a one-off cash adjustment of $1.92 or a subscription extension. Nine will also notify affected advertising customers that they may have been over-surcharged and are entitled to a refund.
Although payment of an infringement notice does not equate to an admission of a contravention and such notices are generally a time and cost efficient mechanism to resolve excessive surcharging issues, the outcome may nonetheless be costly, taking into account the number of transactions, redress initiatives and reputational harm. This may be the case even if the extent of surcharging is relatively minor, as it was for Nine.
If you charge a fee for card transactions, you should ensure that the percentage falls within the range permitted by the Reserve Bank or does not exceed the actual cost of processing the payment. It may be prudent to ensure your systems pick up this compliance point whenever surcharges are increased over time.
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