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New card surcharge rules

Changes to card payments surcharge rules.
On 1 September 2017 the rules are changing for all merchants that surcharge customers who pay by card.

As a merchant, you retain the right to charge an extra fee (surcharge) to customers paying by card. Under the new rules this surcharge is limited to the amount it costs you to accept that type of card for that transaction. Essentially, from September you can’t apply a surcharge that is more than it costs you to process the transaction.

The new rules apply to payment surcharges for six card systems – eftpos, Debit Mastercard, Mastercard Credit, Visa Debit, Visa Credit and the American Express companion card system.
 


Your updated statement

Your June monthly statement, issued in early July, will include two tables which show how much you are being charged to process payments for the different card types. One table will show you your monthly ‘Cost of Accepting Card Payments’ and the other table will show your average annual ‘Cost of Accepting Card Payments’ by card type.

The table below shows an example of how this table will appear in your statement.  The rates shown below are examples only – you will need to refer to your June 2017 statement to find the rates relevant to you.  

Annual Cost of Accepting Card Payments

Any surcharge you apply to card payments cannot exceed your cost of acceptance for the particular card. Your rates below, for year 2016-17 can be used for determining this cost and ensuring your surcharges are not excessive.

  Mastercard
Credit
Visa
Credit
Mastercard
Debit
Visa
Debit

eftpos

UnionPay
International

Net Sales

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

Fees Charged

$101

$102

$101

$100

$20

$165

Average Cost

1.01%

1.02%

1.01%

1.00%

0.20%

1.65%

If you accept American Express, you will need to refer to your American Express statement to see your ‘Cost of Acceptance’.
 


Complying with the new rules

If you currently apply a surcharge to card payments, you will need to be compliant with the new rules by 1 September 2017. The below steps should help you apply the new rules.

1. Finding your annual ‘Cost of Accepting Card Payments’.

Your annual 'Cost of Accepting Card Payments’ for each card type will be shown on your June statement issued annually in early July.

The amount shown is the maximum percentage surcharge you will be able to apply to a customer’s transaction if they pay by card. If you wish to surcharge customers more than this amount, you’ll need to provide proof of how you incurred those additional costs, or potentially face a fine.

The ‘Cost of Accepting Card Payments’ table will take into consideration all fees charged on your main merchant statement, plus any fees charged by the bank that are statement separately, including:

  • UnionPay International fees,
  • Stationery and authorisation fees, and
  • Dynamic Currency Conversion fees.

If you accept American Express, you will need to refer to your American Express statement to find your ‘Cost of Accepting Card Payments’ for that card type.

2. Applying your annual ‘Average Cost of Accepting Card Payments’ as a surcharge.

You should review your surcharge rates once you have received your June statement detailing your annual ‘Cost of Accepting Card Payments’.

Here are some examples of how you can apply the new surcharging rules.

To make surcharging easier, you may wish to apply just one rate to all card purchases. The new rules stipulate you will need to apply your lowest annual cost of acceptance if you select this option.

Card scheme

Annual Cost of Acceptance %

Mastercard Credit

1.01%

Visa Credit

1.02%

Mastercard Debit

1.01%

Visa Debit

1.00%

eftpos

0.20%
Use this rate to apply one rate for all card types

UnionPay International

1.65%

In the example above, 0.20% is the lowest ‘annual cost of acceptance’ and the maximum rate you can charge. The rates shown above are examples only – you will need to refer to your June statement to find the rates relevant to you.

This option is recommended if you only want one surcharge for customers that pay by Mastercard and Visa, and another surcharge rate for eftpos and UnionPay International.

Card scheme

Annual cost of acceptance %

Mastercard Credit

1.01%

Visa Credit

1.02%

Mastercard Debit

1.01%

Visa Debit

1.00%
Use this rate for all Mastercard and Visa transactions

eftpos

0.20%
Use this rate to apply a rate for eftpos

UnionPay International

1.65%

In the example above, 1.00% is the lowest ‘annual cost of acceptance’ across Mastercard and Visa. This is maximum surcharge you can apply to surcharge one rate for Mastercard and Visa. If you wanted to also surcharge for eftpos transactions, you would need to apply a rate not exceeding 0.20%. The rates shown above are examples only – you will need to refer to your June statement to find the rates relevant to you.

3. Updating your surcharges.

Once you have reviewed your June statement, it is time to review and update your surcharge rates if they are above your annual ‘Average Cost of Accepting Card Payments’.

Here’s how we can help.

A. Enable ‘auto-surcharging’ on your EFTPOS 1 terminal.

We’ve made it easy for your EFTPOS 1 terminal to automatically add a surcharge, depending on the payment card your customer uses, through the ‘auto-surcharge’ function on your terminal. This will save you having to manually work out the correct surcharge to apply.

How to enable EFTPOS 1 auto-surcharge:

  1. Call the Merchant helpdesk on 1300 780 940.
  2. Have the surcharge rates you’d like to apply close by, you’ll be asked for these. For any figure above the figure on your monthly statement, you’ll need to keep further proof of those costs incurred.
  3. The rates will automatically be applied by your EFTPOS 1 terminal.

Auto-surcharging is not available on contactless transactions.

B. Update your Payment Gateway.

You’ll need to ensure you’ve updated your Payment Gateway with your new surcharge rates.

1.      To update, St.George PayWay, first log in to your admin console and then input your preferred surcharge rates.

If you use a Third Party Payment Gateway provider, then you should contact them directly to update your surcharges for the different card types. Please click here for a list of Third Party Payment Gateway’s that are accredited with St.George.


Facts about surcharging

We understand your need to manage your business expenses. One way to do this is by surcharging customers who pay by card. While surcharging may seem beneficial for your business, almost 1 in 2 customers have abandoned a purchase in order to avoid a surcharge.1

Cash

Cash is often seen as the cheapest payment method, however there are a number of additional costs such as the time it takes for a shop assistant to count the change when a customer pays by cash. Contactless payments may actually be cheaper for your business to accept due to the speed at which a customer can be served and their purchase processed.

Digital revolution

In the last few years, there has been huge growth in digital technologies such as contactless payment systems.  Customers are increasingly using contactless payment methods such as tap and pay on their mobile devices and wearables. Australia is leading this trend, with the highest number of people who understand and make contactless payments in the world.  

By removing surcharges, it may help give you an edge over competitors who surcharge customers who pay by card, by providing a more favourable customer experience.
 


Frequently asked questions

 

Need help?

Important information

  1. RFi Group Payments Diary 2015.

The information provided on this page is general in nature and does not constitute advice on you circumstances. You should seek independent legal advice as to how these changes may affect you.

Click here  to access the domestic eftpos Payment System BINs provided by eftpos Payments Australia Ltd.

World Mastercard®, Mastercard® and the Mastercard brand mark are registered trademarks, and PayPass is a trademark of Mastercard International Incorporated.

Visa is a registered trademark of Visa Worldwide PTe Limited.

American Express® is a registered trademark of American Express.