Australians File 100,000 Complaints a Year Over Hidden Card Surcharges

ACCC said consumers were upset about the lack of disclosure of add-on costs.

A credit card is placed into a credit card machine for processing payments in La Puente, Calif, on Sept. 11, 2023. Frederic J. Brown/AFP via Getty Images

Australia’s consumer watchdog has revealed that it receives at least 100,000 consumer complaints each year about businesses applying surcharges for using credit and debit cards without proper disclosure.

During a recent parliamentary inquiry, Rami Greiss, an executive general manager at the Australian Competition and Consumer Commission (ACCC), said many consumers feel frustrated by the unexpected add-on costs at checkout.

“It appears to us [that] consumers are particularly concerned and upset when they complain equally as much about the lack of disclosure of point of sale as they are about having add-on costs that they feel are unfair,” Greiss told the Standing Committee on Economics.

This comes as many businesses are applying card surcharges at checkout without properly informing consumers, making them feel misled and overcharged.

Australians Used to ‘Unified Pricing’

One factor contributing to the frustration is that Australian consumers are accustomed to a unified price approach, where the displayed price typically includes taxes, surcharges, and handling fees.

This is different from the approach in the United States and EU countries, where consumers can be charged multiple other types of fees on top of the displayed prices.

Many Australians expect to see the total cost upfront and react negatively when businesses tack on additional fees at the point of payment.

Complaints Mostly Target Small Businesses

According to Greiss, a significant portion of complaints were made against smaller businesses and micro businesses rather than corporations.

However, ACCC Chair Gina Cass-Gottlieb said not all the complaints were accurate.

“What we know is that consumers look to the estimates and the range that the Reserve Bank has put on its website of what the [surcharge] costs will be, … and there is quite a wide range of those costs,” she said.

“At times, what we find is actually consumers believe it’s overcharged, but actually the costs were reflective of the charge.

“That does not mean that’s always the case, but quite often it is the case what we do see.”

Cass-Gottlieb’s remarks were echoed by Greiss.

“Often we hear that people are upset that a surcharge is added to the purchase, and that’s understandable, however, it doesn’t necessarily disclose a breach [of regulation],” he said.

Rules Around Card Surcharges in Australia

In Australia, it is legal for businesses to charge a card surcharge provided that the amount does not exceed what it costs the business to provide a card payment option to consumers.

However, it is prohibited to charge excessive payment surcharges, and vendors need to retain evidence to prove what the cost is based on.

When a surcharge is unavoidable, businesses must explicitly include the surcharge in the displayed price.

For instance, the Reserve Bank estimates that typical surcharge fees are:

• Less than 0.5 percent for Eftpos transactions
• 0.5-1 percent for Visa and Mastercard debit cards
• 1-1.5 percent for Visa and Mastercard credit cards

While there is a ban on excessive payment surcharges for Eftpos, Visa, and Mastercard, it does not apply to other types of payments such as BPAY, PayPal, Diners Club, and American Express cards issued directly by American Express.

Card Surcharging On the Rise

Despite regulatory efforts, card surcharging has increased in Australia in recent years, albeit still accounting for a small percentage of total card purchases by consumers.

A 2022 survey by the Reserve Bank found that around 7 percent of all card payments included a surcharge, up from 5 percent in 2019.

“Data from one payment service provider suggests that there has been an increase of around half of merchants in the hospitality industry surcharging in mid-2023,” it said.

Amid the change, many Australian consumers have said they dislike the practice.

A 2022 research study (pdf) found that 45 percent of consumers would choose an alternative payment method to avoid surcharges, and 20 percent said they would not shop at a merchant that levies a surcharge.

Australia’s Plan to Ban Debit Card Surcharges

Australia is among a few Western countries that still allow card surcharges.

In 2017, the EU banned all businesses from charging card surcharges on debit and credit card transactions, with the UK following in 2018.

Some states in the United States also ban or restrict the practice.

In 2024, the Australian Labor government announced a plan to ban debit card surcharges from January 2026. However, credit card surcharges will still be permitted, provided they follow the existing cost-based restrictions.

A customer uses a bank card to pay for his purchase in Cardiff, the UK, on Oct. 20, 2020. Geoff Caddick/AFP via Getty Images

ACCC to Implement Education and Enforcement Approach

Amid concerns about businesses’ surcharging practices, Greiss said the ACCC would implement a two-pronged approach–education and enforcement.

“There is going to be a necessary element of education and compliance messaging so they [businesses] understand their obligations to consumers in this process, and also what their obligations and rights are under the law once we undertake that exercise,” he said.

“We'll then look for whether there’s non-compliance and take appropriate action following that.”

In a recent development, the ACCC has issued warnings to businesses about excessive surcharges, saying they could face fines of up to $50,000 (US$31,700).