New credit card surcharges have come into effect, which limit retailer surcharging when customers pay with a Visa credit card, both in-store and online.

The rules were developed in response to a Reserve Bank of Australia (RBA) review, aimed at better protecting consumers from excessive surcharging.

Retailers are now required to limit surcharges to the “reasonable cost of card acceptance” for a Visa transaction, and will need to be able to justify any surcharges they pass on to consumers. The justifiable surcharge can be made up by the Merchant service Fee (MSF), terminal line cost, credit card terminal rental, annual acceptance fee and employee training to operate the terminal – particularly in a business with a high volume of employee turnover.

It is important to note that retailers cannot take the MSF of the highest cost scheme and apply that charge across Visa. For instance, if the MSF for AMEX is 2.5 per cent and the MSF for Visa is 1 per cent, they must charge a different surcharge for the two transaction types.

According to Visa country manager Vipin Kalra, the new rules is good news for consumers and should mean the practice is more transparent.
Kalra also said retailers found to be surcharging excessively will be notified by their bank of their non-compliance.

“It will take a little time for retailers to review the new rules and implement them. We will monitor the situation closely to see what effect the changes have on surcharging levels,” he said.

“We hope retailers that surcharge will consider the customer experience. Retailers benefit from a global cardholder base, access to new sales channels and a guaranteed, fast, efficient and secure payment experience when consumers choose to pay with a card, so we hope they take these factors into consideration in their surcharging decisions.”

Similarly, Jost Stollman, Tyro Payments CEO, said if all credit card companies follow VISA and outlaw excessive credit and debit card surcharging, it will save the Australian consumer an estimated $350 million a year.

At this stage AMEX MasterCard, Diners and JCB have not made any decision to participate in the surcharging limiting.