Mosman is known for being an expensive suburb to live but it now appears that retailers are openly flaunting the law by charging up to 5% on credit card transactions despite a ban being introduced as to the amount that retailers can charge.
Basil Nut a local Thai resturant is charging 5% on transactions and they are not advising customers of the additional charge, they appear to have ignored the recent 1% and 1.5% rule introduced in Australia.
I discovered the rip off when I recently ordered a takeaway meal at their Mosman restaurant.
After totalling the bill I queried why there was an additional 5% charge for using a credit card Vs paying cash.
They claimed it was “because of bank fees”.
When we explained that the law has recently changed and that business such as Basil Nut can only charge a maximum fee of 1.5% they claimed that because they were a small business they felt they could charge the additional 5% fee.
When it was explained that From September 1, all Australian businesses will be banned from slugging customers with excessive surcharges for using EFTPOS and credit cards to pay for purchases management at the business who go out of their way to solicite cash sales said that this was “The way we do business”.
It appeared that management were not interested in the new laws especially as they were netting an additional 5% on credit card transactions.
When we asked whether the 5% additional fee applied to orders placed over the phone on a credit card management did not answer my question.
Ban on excessive credit card surcharges extends to all Australian businesses September 1
Customers should expect credit card surcharges to be no more than 1-3pc, depending on the type of card
The Australian Competition and Consumer Commission (ACCC) said the ban, which has been in effect for large businesses since last September, will extend to all businesses that are either based in Australia or use an Australian bank.
The ban means businesses will only be able to charge customers what it actually costs them to process payments for EFTPOS, MasterCard, Visa and American Express cards, including bank fees and terminal costs.
“For example, if a business’s cost of acceptance for Visa credit is 1.5 per cent, consumers can only be charged a surcharge of 1.5 per cent on payments made using a Visa credit card,” ACCC deputy chairman Michael Schaper said.
“Our message to business is that you are not allowed to add on any of your own internal costs when calculating what surcharge you will charge customers.
“The only costs businesses can include are external costs charged to you by your financial provider.”
The ACCC says businesses that want to set a single, flat surcharge across multiple payment methods must set the surcharge at the level of the lowest cost method, not an average.
“Our advice for businesses wanting to set a single surcharge regardless of the type of card their customers use, is it must be the lowest of all the payment methods,” Dr Schaper added.
“You can’t use an average of all payment methods or you will land yourself in trouble.”
That means if a business’s cost of processing for Visa debit is 1 per cent, while its cost for Visa credit is 1.5 per cent and for American Express is 2.5 per cent, the single surcharge would need to be 1 per cent, because that is the lowest of all payment methods.
Small businesses ‘can’t afford not to pass costs on’
The ACCC said the changes will affect billions of transactions each year and are a big win for consumers.