Warning to businesses about excessive Credit Card payment surcharges

The ACCC’s recent action against Europcar serves as a timely reminder to all businesses to ensure that any credit or debit card surcharges charged to customers are limited to the cost incurred by the business in accepting the card.

In July 2018, the ACCC instituted proceedings against CLA Trading Pty Ltd (trading as Europcar) on the basis that Europcar had breached the excessive surcharge laws contained in the Competition and Consumer Amendment (Payment Surcharges) Act 2016.  Europcar imposed a surcharge of up to 1.43% on Visa Card and MasterCard debit card transactions between July and November 2017.  It was found, and admitted by Europcar, that the surcharges were higher than the charges imposed by their bank for the transactions.  These excessive surcharges resulted in only a small additional charge to individual customers, with an average excess charge of just over $1 per customer, however these transactions affected more than 63,000 customers and resulted in Europcar overcharging more than $67,000.00

The Federal Court ordered that Europcar pay $350,000.00 in penalties for charging excessive credit and debit card payment surcharges in breach of the Competition and Consumer Act 2010.

Pursuant to the excessive surcharge laws, businesses must ensure that any surcharges passed on to customers reflect the actual cost to the business.  Whilst a payment surcharge may be a flat or a fixed fee, the charge to the customer must not exceed the cost charged to the business for any particular transaction. The excess surcharge laws apply to Eftpos transactions, as well as credit card and debit card transactions, however certain types of payments are not covered including BPAY, PayPal, Diners Club and American Express Cards issued directly by American Express.

If businesses intend to pass on costs of accepting credit and debit cards, the business must ensure they are fully informed from their bank as to exactly what they are being charged and should ensure that the fee passed onto customers is either equal to or less than the costs the business incurs.  Failure to comply with this risks significant penalties being imposed by the ACCC as a result of the breach of the Competition and Consumer Act 2010.