The NEW law that will stop retailers from charging excessive payment surcharges!

Since 1 September 2017, all businesses across Australia imposing payment surcharges on card transactions will need to comply with new law banning ‘excessive’ payment surcharges. 

1. The new ban on excessive payment surcharges

In February 2016, the Competition and Consumer Amendment (Payment Surcharges) Act 2016 (Cth) introduced new part into the Competition and Consumer Act 2010 (Cth) banning excessive payment surcharges (s 55B). It provided new powers for the ACCC to enforce the ban and to ensure businesses take steps to comply with the law. A payment surcharge is considered excessive if it exceeds the ‘cost of acceptance’.

Businesses will need to limit the amount it charges its customers for use of payments methods such as credit and debit cards. The limit will be linked to the direct costs of the businesses’ payment method such as bank fees and terminal costs. If the businesses impose a payment surcharge, it can only pass on to its customers what it costs them to process a payment.

It’s also important to put any agreements you make with your co-founders in writing, (i.e. Shareholder’s Agreement or Partnership Agreement). This makes sure everyone is clear on how the start-up will be run, who owns what, and will minimise misunderstandings.

If your cost of acceptance for Visa Credit is 1% you can only surcharge 1% on Visa credit card payments onto your customers.

2. The Difference Between a Surcharge and a Processing Fee

In short, if you impose a fee, however you describe it, that is payable on some payment methods but not others, then it is likely to be considered a payment surcharge.

The ban does not prevent you from charging fees that are genuinely unrelated to payment methods, however, you will need to consider whether the processing fee would fall within the definition of payment surcharge. 

3. What payment types are included and excluded from the ban?

The ban covers surcharges on typical card payment methods:

  • Eftpos (debit and prepaid)
  • MasterCard (credit, debit and prepaid)
  • Visa (credit, debit and prepaid)
  • American Express “companion cards” (American Express cards issued through an Australian financial service provider, rather than directly through American Express)

Excluded Payment types:

  • BPAY
  • PayPal
  • Diners Club cards
  • American Express cards issued directly by American Express
  • Cash
  • Cheques 

4. How do you calculate the payment surcharge?

For most businesses, calculating your permitted surcharge will be quite simple. All of the standard card acceptance services which are supplied to you by your bank or payment facilitator will be set out in the monthly statements you will receive from 1 June 2017. The statements will outline your cost of acceptance for each applicable payment type expressed as a percentage of the value of a transaction.

If you obtain any of the following services from a provider other than your bank or payment facilitator:

  • fees for the rental and maintenance of payment card terminals
  • gateway fees
  • cost of fraud prevention services
  • fees or premiums to insure against ‘forward delivery risk’

You want to pass on these costs in a payment surcharge then you will need to calculate your permitted surcharge yourself.

5. Can I impose a single payment surcharge for Visa Debit and Amex?

Failing to invest in an experienced start-up lawyer can be a big mistake with many forthcoming consequences. After all, a good legal adviser will help you understand such crucial matters such as tax law and employment law. As any businessman who has ever ended up in an employment tribunal or a tax audit can tell you, neglecting these details can be like taking all your funding out of your bank account and setting it on fire.

Indeed, Forbes lists not having the right legal counsel as one of the ten biggest mistakes a start-up founder can make. Working with a savvy and smart start-up lawyer will not only help you avoid stressful and financially draining legal challenges down the track, but it will also free you up to focus on the development of the business. That’s that rare thing in business, a win-win. 

6. How do you calculate the payment surcharge?

If you wish to impose a single surcharge across multiple payment types, you must set the surcharge at the level of the average cost of acceptance of the lowest cost system; that is, no higher than the lowest permitted surcharge.

For example, if your average cost of acceptance for:

  • Visa Debit is 1%
  • Visa Credit is 1.5%
  • American Express is 2.5%

You would be permitted to charge the same level of surcharge for each payment system, but it would need to be 1% as that is the lowest of all payment systems. 

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Barry Lazarus

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We’d be lying if we told you that this bloke isn’t the big honcho of our team, but his name is a dead give-away. The founder of Lazarus Legal, Barry is an old school, tough as nails lawyer. They don’t forge litigators like this anymore.

With decades of experience in both Australia and South Africa, his wisdom is as renowned as his name. Back in the days when Schwarzenegger and Van Damme were kicking ass on VHS, Barry was kicking ass in the courtroom. And after all these years, he still has a reputation for refusing to back down.Barry is definitely the badass you’d want in a fight – in court or otherwise. But really, he’s a big softie. Just don’t let him know you know that (although he probably won’t read this anyway – navigating the Internet is not his strong point).

Aside from putting other lawyers in their place, taking long walks on the beach and spending time with his family, Barry enjoys seeing others succeed. Not only is Barry a staunch and unmoving litigator, he has sharp business and commercial acumen having started up ventures from scratch and growing them into full-blown franchises – from real estate to creating ice cream, to making pasta. With his experience on both sides of the commercial and legal equation, you want this guy to be on your side, whether you’re the next Zuckerberg realising your genius, or the next Zuckerberg taking on your opponents in court.

When Barry is not busy lawyering about, he is a part-time lawn bowler and a wannabe comedian, but never took both as a day job, because let’s face it, he’s a lot better at his day job.

If someone ever threatens you to lawyer up…relax, call Barry and he’ll handle the rest. 

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Mark Lazarus

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The visionary behind the business and the fresh blood of the Lazarus Legal team, Mark (or Laz as he is often known) owes much of his success to his past stories and experiences. And he’s made it his personal goal to bring that wisdom and formula to the firm.

He’s a bit of jet setter, splitting his time between Australia and the UK, maximising every hour of his professional life. He thrives on this adrenalin. It allowed him to work in private practice in Sydney, act for a host of famous celebrities in London, do a two year stint as a NSW barrister (and not the pretentious coffee type in the Melbourne laneways) and more recently did a gig as the Legal Director covering Europe, the Middle East and Africa for one of the world’s coolest fast-moving consumer good brands!  

As an Aussie and UK lawyer and former barrister, Mark not only has the gift of the gab but he’ll walk the walk to prove it too. He likes to think he’s a bit like Harvey Specter or Michael Corleone, the main difference is you can actually retain him as your lawyer and consigliere. He’ll tell you how it really is and will take on any challenge head on. Although litigation and court advocacy comes naturally to him, commercial and IP is what gets his blood pumping! 

When Mark is not out there doing his thing, you will probably catch him chilling at home with his family, on the sidelines of the soccer (football) pitch cheering on his two boys, crawling through mud obstacles, or training hard at the gym. Passion and commitment is what drives Mark to succeed, along with his burning desire to disrupt the legal profession by finding new ways to change the game.

He has sights on the future. So if you’re breaking new ground, ahead of the times, and on the verge of something big, but you need someone who’s got your back and who can give you straight up advice, this is the guy you will want on speed dial.

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