Card surcharge shake-up starts October 1

Businesses are being urged to review their pricing and payment systems before major card surcharge changes take effect on October 1.

From that date, businesses will no longer be able to add surcharges to eftpos, Visa, Mastercard and American Express card payments.

For businesses that currently pass card-processing fees directly to customers, the change means those costs will instead need to be absorbed or accounted for through broader pricing decisions.

Evergent Group Founder and CEO Lucas Helmke said the change should prompt business owners to understand exactly what they are paying to accept card transactions.

“A lot of small businesses have been hit with price increases from their suppliers but haven’t increased their own prices,” Lucas said.

“Their gross margin has been reduced, so this is an opportunity to review pricing and make sure they’re covering their costs.”

The change could be particularly relevant for cafes, restaurants, retailers and other businesses processing large volumes of card transactions.

Businesses with memberships, subscriptions and other recurring card payments should also check their payment platforms to understand what processing fees they will carry once surcharging ends.

Businesses that invoice customers also need to prepare. The Reserve Bank of Australia says an invoice issued before October 1 may no longer attract a card surcharge if the customer pays it on or after that date.

The Australian Competition and Consumer Commission is advising businesses to review their pricing and customer-facing information before the changes. While card-processing costs can be incorporated into overall prices, businesses must not mislead customers about the reasons for a price increase.

There is some relief on the cost side, with lower interchange fee caps also taking effect from October 1. The RBA expects the changes to reduce card acceptance costs, particularly for small businesses.

However, interchange fees are only one component of what businesses pay to accept cards, so operators should check their actual merchant fees rather than assume their costs will automatically fall by the same amount.

Lucas said businesses should use the lead-up to October to compare providers and negotiate.

“Talk to your bank or payment provider and make sure they’re giving you the lowest possible fee. Shop around, compare providers and don’t be afraid to negotiate.”

For City of Moreton Bay businesses, the practical message is to act before October 1: understand what card payments currently cost, check how payment providers will implement the change and make any necessary pricing decisions before surcharges disappear.

What businesses should do before October 1

• Check your costs: Review merchant statements and calculate what card payments currently cost your business.
• Review your pricing: Consider whether processing costs need to be incorporated into your prices.
• Check outstanding invoices: Find out how invoices issued before October 1 but paid after that date will be treated.
• Contact your provider: Confirm what will change and what merchant fees will apply.
• Compare providers: Shop around and negotiate merchant fees.
• Check payment options: Ask whether least-cost routing is available and compare the overall cost of different payment methods.
• Review recurring payments: Check memberships, subscriptions and automatic card transactions.
• Update customer information: Review menus, websites, invoices and signs referring to card surcharges.
• Talk to your accountant or bookkeeper: Check how merchant fees are recorded and the GST treatment that applies to your circumstances.

This article provides general information only. This is not financial, tax or legal advice. Liability limited by a scheme approved under Professional Standards Legislation.