The ACCC has received over 3000 complaints about excessive card payment surcharges since new regulations came into effect

Small businesses are being encouraged to review any additional fees they charge for credit card use, with the consumer watchdog reporting there have been more than 3000 complaints by customers about excessive surcharges since new regulations were introduced in 2016.

The Australian Competition and Consumer Commission (ACCC) tells SmartCompany since September 2016, 3144 complaints have been made to the consumer watchdog by customers allegedly being charged excessive card payments by businesses.

A number of these complaints involved customers paying a surcharge higher than the total cost of the product.

Changes to excessive surcharges regulations in Australia have been introduced over the past two years, preventing businesses from charging fees on top of costs attributed to processing card payments.

In September 2016, businesses with consolidated gross revenues greater than $25 million were banned from charging excessive fees. One year later, these bans expanded to cover businesses of all sizes.

“For example, if a business’s cost of acceptance for Visa credit is 1.5%, consumers can only be charged a surcharge of 1.5% on payments made using a Visa credit card,” ACCC deputy chairman Michael Schaper said in a statement.

In the first year of the ban, the ACCC received 1391 complaints about charges that were too high. In the second year, when the rules also applied to smaller businesses, this number grew to 1753 complaints.

The consumer watchdog has only taken action against one company so far over the issue, with Naomi Simson-founded RedBalloon fined $43,200 in November 2017 after it was found the company’s surcharges breached the new rules.

Small businesses advised to check what they’re charging customers

Australian Small Business and Family Enterprise Ombudsman Kate Carnell says a number of these complaints possibly stem from SMEs that have not reviewed what they charge customers since the new regulations came into effect.

Carnell says it’s important for small businesses to double-check what they’re charging customers, and remove anything on top of credit card processing fees.

“What we have recommended to businesses is to have a look at what’s being charged generally and look at it from a bench-marking perspective,” Carnell says.

Carnell also says larger companies like airlines were charging customers excessive fees prior to the regulations coming into effect, leading to customer complaints to the ACCC.

She observes that small businesses tend to make agreements with credit card providers at higher processing rates than big businesses, because the alternative of only accepting cash-only transactions will severely limit their income.

Credit card providers have more freedom and power in negotiations around how much they charge small businesses to use their services, she says.

“It is really frustrating. [Big businesses] were charging ridiculous amounts of money that is now being reduced which is a step in the right direction,” she says.

“The big stores pay very little to the credit card providers. The smaller businesses are more likely to pay higher fees, and so the customers’ fees are going to be higher.”