Ever been frustrated by paying for flights or items online/in store using your credit card and being stung with a fee for simply using your card?

The Turnbull government has announced that the fee charged by retailers and merchants for using a credit card as payment method cannot be higher than what the merchant’s cost of processing the transaction is. This is typically 0.5 per cent but many retailers and companies can charge up to 10%.

This legislation aims to stop inflated surcharges from companies. The ban has a staged introduction. It currently applies to large businesses and will apply to all other businesses from 1 September 2017.

How this works

Say you purchased an airfare through an airline’s online booking system and want to pay for the ticket with your Visa credit card.

The airline is charged a total of 1% of the cost of each transaction for accepting payments using Visa credit cards. However the airline is not required to impose a surcharge. If it does it will usually be a percentage figure, although in some cases it might charge a flat fee – however the surcharge must not be excessive for any given transaction.

The airline decides to pass on this cost to you as a payment surcharge on Visa credit card transactions.

If the airline charges you a payment surcharge which is equal to or less than 1% of the value of your transaction, it’s not in breach of the ban.

If the airline charges you a payment surcharge which amounts to more than 1% of the value of your transaction, then the surcharge is likely to be excessive and may breach the ban.

Surcharges by other names

The obvious concern with a cap on credit card surcharges is that we consumers will start to see fees for processing card payments (and in most cases debit card payments too) popping up as other types of fees. They might already exist, but could go up, or could be introduced when they weren’t there previously. Here are some of the names we’ve spotted that could be used to absorb the costs – so keep an eye out on your bills, your invoices and receipts and when you go to checkout online. The online retail world is a big fan of the surcharge.

These fees don’t all have to cover the cost of credit card payments, so it’s easy for a business to add them on and charge what it thinks is fair and reasonable.

      A booking fee
 A ‘booking and handling’ fee
      A service fee
       A processing fee
     An administration fee
   A card payment fee (can apply to debit cards or eftpos too)
     A shipping and handling fee
    A freight fee
 A delivery fee
     An establishment fee (usually applies to subscription set up)
A joining fee

What to do if you think you have been charged an excessive payment surcharge

Contact the ACCC to lodge your complaint and they will investigate the matter.