Australia: Merchants beware: ACCC given powers to stop excessive surcharging

The first step in the enhanced regulation of merchant surcharging came into effect when the Competition and Consumer Amendment (Payment Surcharges) Bill 2015 was passed by the Parliament on 22 February 2016. This legislation was foreshadowed by the RBA in their Review of Card Payments Regulation consultation paper issued in December 2015 (Consultation Paper).

The Competition and Consumer Protection Act 2010 (Act) has now been amended to give the Australian Competition and Consumer Commission (ACCC) the power to take action where merchants breach the standards established by the Reserve Bank of Australia (RBA) in respect of the amount they surcharge customers for paying for goods and services with credit or debit cards.

A new Part IVC has been inserted into the Act which:

  1. empowers the ACCC to request surcharging information from corporations that charge a surcharge1;
  2. impose a penalty of 30 penalty units (currently $5,400) against a corporation that fails to comply with a request from the ACCC to provide surcharging information2;
  3. enables the ACCC to issue an infringement notice where it believes on reasonable grounds that an excessive surcharge has been charged. 'Excessive' is defined as exceeding:
    1. an RBA standard; or
    2. a regulation made in this respect3;
  1. requires an infringement notice to state the penalty assessed by the ACCC as being payable in respect of the alleged contravention4;
  2. provides for a maximum penalty of:
    1. 600 penalty units for listed corporations (currently $108,000);
    2. 60 penalty units for an unlisted body corporate ($10,800); and
    3. 12 penalty units for a person not being a body corporate ($2,160)5; and
  1. Provides that a failure to pay a penalty in accordance with an infringement notice will allow the ACCC to commence proceedings to recover the penalty against that person (unless the notice is withdrawn by the ACCC after consideration of representations made by the affected person)6.

In order for these changes to become effective the RBA will need to establish the requisite standard to assess whether any surcharge is excessive. The RBA's Payment Systems Board issued a guidance note in 2013 detailing what it viewed as 'reasonable cost of acceptance'. These views have been further refined by the RBA in its draft standard no.3 that is attached to its Consultation Paper.

The draft standard7:

  1. covers payments made by MasterCard and Visa credit, debit and prepaid cards, American Express companion cards, EFTPOS debit and prepaid cards;
  2. prohibits a card scheme or scheme participant from stopping a merchant from recovering an amount that does not exceed the 'Permitted Surcharge';
  3. establishes the maximum amount of a surcharge (being the 'Permitted Surcharge') by reference to the following 'Permitted Cost of Acceptance Elements' incurred by the merchant:
    1. the merchant service fee;
    2. fees for rental and maintenance of card terminals;
    3. processing fees levied by the acquirer or payment processor including international service assessments or cross-border transaction fees;
    4. other fixed fees for providing payment acquiring equipment and services referrable to a relevant card scheme being fees that are included on a merchant's card processing statement; and
    5. where any of the above fees that are not based on a per transaction basis and is not referrable to a single scheme being applied on a pro rata basis.
  1. To calculate the 'Permitted Surcharge' amount, merchants use where:
    1. a single fee is paid by the merchant that covers the 'Permitted Cost of Acceptance Elements' that fee will be the 'Permitted Surcharge Amount';
    2. no such single fee applies then an average cost of acceptance (using the 'Permitted Costs of Acceptance Elements' based on the past 12 months transactional data); or
    3. the merchant does not have a single fee or 12 months of activity to base the calculation, then an estimate of the average cost of acceptance calculated by the merchant in good faith using known or estimated 'Permitted Cost of Acceptance Elements' and transaction volumes.

Limiting the costs elements that a merchant can use in calculating a maximum surcharge aligns with the RBA's preferred Option 3 in the Consultation Paper in which the RBA's aim is to:

"preserve the rights of merchants to surcharge for high-cost payment methods while ensuring that merchants do not abuse this right by surcharging in excess of their acceptance costs. It would retain the cost of acceptance as the ceiling for surcharges, but would define acceptance costs explicitly and more narrowly."8

In a speech by Tony Richards, the Head of the RBA's Payments Policy Department, to the Payments Innovations 2016 Conference on 23 February 2016, he indicated that some of the issues to be explored in future consultation meetings which arose out of the consultation process included:

"... the calculation of 'Permissible Surcharge' for merchants (such as travel agents or ticketing agents) that are subject to significant chargeback risk when they accept credit or debit cards."9

In acknowledging the cost of fraud in this way, merchants may still have the ability to lobby the RBA to include, not only the chargeback losses, but also the associated costs of implementing fraud detection tools such as 3D Secure currently under consideration by APCA for mandatory implementation by online retailers10.

Mr Richards indicated that the RBA's Board had an expectation of finalising the review flowing out of the Consultation Paper in time to enable a determination of required regulatory changes at its May 2016 meeting. Mr Richards also noted that the Board recognised that a transition period will be necessary to enable the industry to adjust to the reforms.11


1 Competition and Consumer Protection Act 2010 S 55C

2 Competition and Consumer Protection Act 2010 S 55E

3 Competition and Consumer Protection Act 2010 S 55G

4 Competition and Consumer Protection Act 2010 S 55H

5 Competition and Consumer Protection Act 2010 S 55J

6 Competition and Consumer Protection Act 2010 S 55L

7 RBA's Review of Card Payments Regulation Consultation Paper December 2015 p 59

8 RBA's Review of Card Payments Regulation Consultation Paper December 2015 p 29

9 Tony Richards, Head of Payments Policy Department RBA :The Ongoing Evolution of the Australian Payments System dated 23 February 2016 at page 18

10 Australian Payments Clearing Association Ltd – Authorisation – A 91525 & A91526 Lodged with the ACCC on 28 January 21016.

11 Tony Richards, Head of Payments Policy Department RBA :The Ongoing Evolution of the Australian Payments System dated 23 February 2016 at page 19

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.