23 March 2016

How to get surcharging right every time

With new laws coming into place where businesses can be fined up to $108,000 for excessive surcharging, it’s something you have to get right. Fortunately with Tyro’s Merchant Portal, it’s easy, accurate, and fast.

Surcharging has always been a vexing issue for SMEs … and a confusing one. There are dozens of new credit cards coming onto the market all the time and all come with their unique and wildly varying fee.

So recovering those fees with a surcharge has always been a headache for merchants who have to come up with a figure that’s enough so they don’t lose out while, at the same time, not drive their customers away.

In striking that balance, merchants often feel they are damned if they do and damned if they don’t. And now with new legislation passed which cracks down on credit card surcharges, they will be fined if they get it wrong.

As part of the new laws effective from September 2017, businesses that are caught making “excessive” surcharging will be fined up to $108,000 for each contravention by the Australian Competition and Consumer Commission (ACCC).

What’s “excessive” mean?

Well, in simple terms surcharges should equate to the cost of accepting payment by credit card. It’s excessive when a merchant charges the customer any more than the cost of the transaction.

Why the crackdown?

Ever hopped into a cab or booked a flight or a concert ticket? You’ve most likely been hit with an excessive surcharge. The changes comes off the back of years of these ridiculous fees being charged across several sectors, particularly in the airline, taxi and ticketing industries, and by constant lobbying from consumer groups to the Murray Financial System Inquiry.

To give you an idea of how much the taxi industry relies on surcharges, you just have to look at how Cabcharge’s net profit in the December half in 2015 dropped 21.7 percent to $24.4 million when Victoria, NSW and Western Australia slashed them. In those states, Cabcharge was forced to more than halve the electronic payments surcharge to five percent.

As for the airline industry, consumer group Choice said all the major domestic airlines were gouging with the worst offenders being Jetstar, who charged $8.50 on an $85 fare estimated to cost just 66 cents to process (1180% mark-up), and Tiger Air, who were not far behind with a $8.50 fee on a $95 fare (1040% mark-up).

It’s hard to know how much consumers will save with the new changes, but the figure being touted is as much as $800 million a year.

How do SMEs get surcharging right?

Well, it’s easy with Tyro. We’ve taken the hassle out of the whole mess with our easy-to-use online reporting feature in the Tyro Merchant Portal that calculates an acceptable surcharge amount on cards.

On the portal’s My Costs and Invoices page, you’ll get a figure (as a percentage) of what you’ve been charged for each type (Visa, Mastercard, American Express, Diners Club, and JCB).

With this as your guide, you’ll be able to set your surcharging rates with the confidence that you will be recovering what you are rightly owed, while not leaving yourself open to complaints of over-charging, and the potential of hefty fines.

This is just one of the many tools we’ve designed to give you greater transparency and flexibility in managing your account. By logging into the Merchant Portal, you can also view reports of their day’s takings across each terminal, see a breakdown of card and service charges, track past invoices and much more.

To see how we can help you run your business easier contact us today.

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