Aldi cops flak from ASIC on credit card surcharges

German discount supermarket Aldi has been forced to change the point-of-sale signage in a number of its stores after the corporate regulator found its disclosure of credit card surcharges was inadequate.

A review by the Australian Securities and Investments Commission found the popular supermarket chain did not consistently disclose in all of its stores that credit card customers would be charged a 0.5% surcharge on purchases.

At least two Aldi stores had no material advertising the credit card surcharge to customers, while some stores presented the information on a sign about the registers and others informed customers via a sticker at the register.

ASIC found Aldi customers were not informed of the 0.05% surcharge that applies when they used their credit and debit cards for contactless payment or “tap and go” transactions, and in cases were a PIN or signature was required for a credit card payment, customers were informed about the surcharge after they had inserted or swiped their card, which ASIC said “was too late”.

Under the Australian Securities and Investments Commission Act 2001, it can be considered misleading or deceptive if businesses do not adequately disclose surcharges or create the impression that surcharges do not apply.

ASIC said in a statement that in response to its findings, Aldi has agreed to update its store signage as well as further educate cashiers to tell customers about the surcharge before their transaction is finalised.

A spokesperson for Aldi Australia told SmartCompany the supermarket has had hanging signage and stickers at registers outlining credit card fees since the company first began accepting credit card payments.

But the spokesperson says the signage will be updated “to also specifically reference the Tap and Go surcharge”.

“Aldi is aware there are high costs associated with accepting credit cards,” says the spokesperson.

“However, rather than inflating prices across the board, to compensate for the credit card acceptance costs, Aldi prefers customers to make the choice themselves.”

ASIC deputy chairman Peter Kell said in the statement merchants are responsible for disclosing credit card surcharges to their customers.

“Merchants need to be transparent about fees and charges where credit card surcharges apply so that consumers can consider using other payment methods without additional costs,” said Kell.

“Consumer should also be mindful that payments by contactless or “tap and go” cards are currently treated as credit card transactions, meaning that fees may apply where there are surcharges in place, even where they are using a debit card. We urge merchants to ensure consumers are aware of any surcharges that may apply for payments using these cards.”

Chris Hamilton, chief executive of the Australian Payments and Clearing Association, told SmartCompany understanding the requirements around credit card surcharges can be “tricky” for SMEs.

However, he said this example highlights the one straightforward message all merchants should follow.

“Think carefully about if your customers know what they are paying, and if they don’t, put up a sign,” says Hamilton.

Hamilton says in this case, ASIC is indicating that if a merchant is charging a surcharge but not telling their customers about it, they are potentially acting in a misleading way.

And there is potential for more confusion when it comes to contactless payment transactions, says Hamilton, with some payment terminals not offering the opportunity to choose between debit and credit accounts when the payment is processed.

“So again disclosure is relevant,” says Hamilton. “It’s a wise idea to put a sign up.”

The other important consideration is if the surcharge being levied is “reasonable”, says Hamilton, although the actual surcharge amount will vary between industries.