Back to blog

Credit Card Surcharges and Your Rights

No one likes being slugged an extra charge on something, especially not as a customer. But we see it all the time. Usually you will see a credit card surcharge when you pay online for something, but it is also prevalent in stores that we frequent every day. So what are your rights as a customer, and what are they as a business?

There's been a lot of talk about these charges lately, and which ones are able to be charged or for how much is allowable. For years there have been excess charges on many websites, most particularly airlines hitting consumers with an $8.50 charge. How do they get away with it? Because they can. But that might be able to change with new guidelines coming into effect this week from the RBA.

Currently, as advised by the ACCC, the following is permissible:

"Businesses can choose whether or not to pass on the cost of accepting credit card payments to their customers. However, if you decide to impose a credit card fee, you must ensure your customers are aware—before they enter into the transaction or contract—that a fee will apply and the amount of the fee.

The current information from the RBA is lot more detailed and sets out what some of the changes might be for both consumers and merchants. One of the changes that should be coming into effect is the following:

"It is important, however, that merchants do not impose surcharges in excess of their actual payment costs. The Reserve Bank has previously expressed concerns about excessive surcharging in some sectors. Accordingly, and consistent with the Government's draft legislation, the Reserve Bank's Payments System Board is proposing changing the surcharging standard with the aim of ensuring that customers cannot be surcharged any more than the actual cost of accepting cards."

While this all sounds like it's a great reform for many of the customers, some people are worried that this is going to have the opposite effect and will turn merchants who didn't before use surcharges into all of a sudden expecting them. It's been mentioned that businesses might start exercising their rights to charge people because the guidelines are clearer now. It's a murky slope and one which will see people vote with their wallet.

But it's also not all bad news for consumers, with some retailers going on record and becoming Surcharge Free! Surcharge Free is promoting the benefits of not charging your customers a surcharge just because you can, as overall it might lose you business in the long run as people avoid your store (because of your surcharge) after you sting them once.

"If you’re in business then you’re in the experience business, no matter your industry"

"Every interaction with your customers is a chance to make a great impression. Not making your customers pay a surcharge when it’s time to settle their bill is a sure way to finish on a positive note. Being Surcharge Free is good for business and has been shown to directly improve customer loyalty."

It's obvious that these business are following on the premise of "when the shoe's on the other foot" and wanting to keep their customers happy in the long run. Maybe you don't charge a surcharge already and you have no plans to, then you should sign up, add your logo, take the pledge and get a free tent card to display to your customers. I'm sure they'd be happy to see it.

If however, you do wish to charge a surcharge, then you are completely within your rights to do so. Idealpos has the ability on each tender to allow you to make that decision and you can easily set a surcharge as a % or $ figure each time that tender is used. The choice is in your hands. We'll update when details of the changes are released.

So what do you think, are you going to charge a surcharge or sign up and be surcharge free? Will you as a customer avoid businesses that add a surcharge to your sales?