Australia to ban card payment surcharges from October

Australian Payments Network and card networks eftpos, Mastercard and Visa have launched a public information website about Australia's new ban on card payment surcharges. From 1 October, businesses will no longer be able to add surcharges to eftpos, Mastercard and Visa transactions.

The website explains what will change for consumers, businesses and payment service providers as the new rules take effect across the Australian payments system. It includes frequently asked questions and practical guidance on how the rules apply to different card types and payment channels.

Under the new framework, businesses will not be allowed to apply card payment surcharges to transactions on the three designated networks. The rules will apply to in-store, online and digital payments, including cards used through mobile wallets.

The ban covers personal, commercial, corporate, credit, debit and pre-paid cards. It is limited to surcharges imposed because a customer pays by card rather than by another method.

Some fees will remain outside the changes. Charges that apply regardless of payment method will still be allowed, and arrangements explicitly permitted under law or regulation, including taxi fare surcharges regulated by states and territories, will remain in place.

The move follows the Reserve Bank of Australia's review of merchant card payment costs and surcharging, which concluded that surcharging on debit and credit cards should end because it was no longer meeting its original purpose.

Industry guidance

The industry groups involved urged businesses to prepare by speaking with their bank, payment service provider, payment gateway or point-of-sale provider. They also advised reviewing pricing structures, updating checkout displays and testing payment systems before the rules begin.

The website is intended to provide a single source of information as merchants, consumers and payment providers adjust to a significant shift in how card costs are presented at checkout. It also reflects a coordinated industry approach, with the three networks introducing the rule change at the same time.

Andy White, Chief Executive Officer of Australian Payments Network, said the simultaneous rollout was designed to avoid a fragmented transition.

"The value of the card networks moving in lockstep is that consumers and merchants are afforded a single, simultaneous change rather than a staggered one. As champions of the Australian payments system, we are committed to helping ensure the successful implementation of these changes, placing importance on stakeholder education," White said.

The guidance is aimed not only at shoppers and merchants but also at the companies that process transactions behind the scenes. Those providers will need to ensure systems, pricing displays and checkout settings no longer apply card-specific surcharges where the new rules prohibit them.

Lynn Kraus, Chief Executive Officer of AP+, which operates eftpos, said the breadth of the change meant preparation time and clarity would be important.

"Changes to card surcharging will affect consumers, businesses and payment providers across Australia, so it is important that everyone has clear information and time to prepare. This new resource provides practical guidance to help businesses and payment providers understand what is changing, what it means for them and the steps they may need to take ahead of 1 October," Kraus said.

For consumers, the change will be most visible at the point of sale, where businesses that currently add a card fee will need to change pricing and checkout processes. For merchants, the shift may require decisions about how to absorb or reflect card acceptance costs elsewhere in their pricing.

Mastercard said the impact would vary across businesses depending on their circumstances and cost structures.

"Removing card payment surcharges will bring greater clarity and consistency at the checkout for consumers, while we recognise the change will have different implications for businesses depending on their circumstances. Our focus is on working with the industry to support a smooth transition and providing practical information to help consumers and businesses navigate the changes with confidence," Monnington said.

Visa presented the rule change as a step towards a simpler checkout experience, with the displayed price more closely matching the final price for card users.

"Card payments are one of the most efficient, secure and convenient ways for consumers and businesses to pay and be paid. Removing surcharging makes the checkout experience more consistent for everyone - the price you see is the price you pay. Visa is committed to working closely with the payments industry to support the transition for businesses and their customers across Australia," Machet said.