Every week we will break down, debunk and demystify your rights as a shopper in Australia. This week we are looking at businesses that enforce additional surcharges for card payments, and whether that's legal.
We all know life is getting more expensive than ever before, and how important it is to stretch every dollar you make.
That's why each week we'll answer a question surrounding what shoppers are – and aren't – entitled to when dealing with retailers and manufacturers.
MONEY MATTERS: Is it legal for a shop to refuse cash as payment?
Punished for using a card?
I was just buying a coffee and a sandwich from my local cafe when I saw a sign on the register that said all purchases made with EFTPOS would incur a 5 per cent surcharge.
It didn't worry me because I wasn't spending much money, but it got me thinking – is that illegal?
It may be, as 5 per cent sounds excessive.
According to the Competition and Consumer Amendment (Payment Surcharges) Act 2016, a business cannot charge a payment surcharge that is deemed to be "excessive".
So what is excessive?
According to consumer watchdog the ACCC, the amount of the surcharge must not exceed the costs incurred by the business to accept that payment type.
MONEY MATTERS: Is it legal for a shop to only accept cash as payment?
Some shoppers might not realise that it actually costs businesses money to accept some payment forms, such as credit cards.
The business is allowed to recoup this cost as a surcharge on the transaction, but it can only be to cover costs – they can't profit from it.
Payment types covered under the law include Eftpos, Mastercard, Visa and American Express companion cards.
According to the ACCC, it's unlikely for surcharges to exceed any more than 2 or 3 per cent.
"The RBA has said that as a guide, payments through the domestic Eftpos system (used to process payments from debit cards) are usually quite low, mostly below 0.5 per cent. Accepting a Visa or MasterCard debit transaction may cost a business around 0.5 to 1 per cent of the transaction value," the watchdog notes on its website.
"Credit cards usually have a higher cost for businesses, and may cost the business up to 1-1.5 per cent for Visa and MasterCard, and between 1.5-2 per cent for an American Express card payment.
"It is important to note that different businesses have different costs of acceptance. In general, smaller merchants' costs may be higher than these indicative figures."
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So what should you do?
The best thing to do is to discuss the surcharge politely with the business who is charging it – it may be necessary.
If you're still thinking you're being overcharged on some payment types, you can contact the ACCC here.
The information provided on this website is general in nature only and should not be taken as legal advice. People who need clarification on these matters should obtain appropriate legal advice.