Beware Xmas surcharge rip-off

Businesses have been put on notice ahead of the Christmas shopping period, as the Australian Competition and Consumer Commission (ACCC) cracks down on excessive payment surcharging.

The ACCC issued its first formal infringement notices under the new excessive payment surcharging provisions to online trader Red Balloon, a company that sells ‘experiences’ online, last week.

More notices are expected to be issued in the coming weeks in a significant wake-up calls for retailers.

The ACCC alleged that on 31 March and 30 June 2017, Red Balloon charged four consumers excessive payment surcharges for payments they made by MasterCard credit, Visa credit, Visa debit and MasterCard debit respectively.

Under the rules, which came into force on 1 September, the surcharge on card purchases now has to reflect the true cost of the transaction to the merchant, not an artificially inflated sum designed to profit gouge. Businesses can only pass on to customers what it costs them to process a payment.

For example, if the cost of acceptance for Visa credit is 1 per cent, a business can only add a surcharge of 1 per cent for customers who pay with Visa credit.

Many businesses choose not to impose surcharges. Where they do choose to impose a charge for card payment, this needs to be made clear to the consumer.

As a guide, where a charge is imposed, consumers should expect to pay around 0.5 to 1 per cent for payment by debit card, 1 to 1.5 per cent by MasterCard and Visa credit cards, and 2 to 3 per cent for American Express. If charges exceed these ranges, the matter can be raised with the ACCC for investigation.

If people think they are being hit with an excessive surcharge when they go to the shops, buy tickets online or book a holiday, they should not hesitate to contact the ACCC on 1300 302 502.

Will you keep an eye on your credit card surcharges when you do your Christmas shopping this year? Have you ever been overcharged in the past?

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Written by Ben

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