What is a Surcharge?

Let’s say you’re a small business owner, and a customer pays using a credit card. Did you know that every card transaction costs you money? This is called the cost of acceptance, and it includes things like merchant service fees and device rental costs. To cover these fees, many businesses add a surcharge to the customer’s transaction a small percentage added on top of the total.

A surcharge is a way for businesses to offset the costs of accepting payments by card, especially when customers use Visa, MasterCard, or EFTPOS. But it’s important to manage surcharging correctly, and that’s where Live Payments can help.

How Surcharging Works with Live Payments

At Live Payments, we offer differential surcharging. This means that you can set different surcharge amounts based on the type of card your customer uses. For instance, you might charge a lower percentage for EFTPOS and a slightly higher one for credit cards, depending on the fees associated with each.

When setting up your payment device, you have the flexibility to choose how you surcharge, whether it’s a flat rate across all transactions or a more specific rate based on the card type used. This flexibility ensures that your surcharges accurately reflect your cost of accepting payments.

What Can Be Included in a Surcharge?

Not all business expenses can be passed on to the customer. According to the Reserve Bank of Australia (RBA), only certain costs can be included in your surcharge:

• Merchant service fees: The percentage of each transaction that goes to the payment provider.
• Device rental fees: The cost of leasing your Live Payments EFTPOS device.

It’s critical to stick within these guidelines to avoid overcharging, which could result in penalties under the Australian Competition and Consumer Commission (ACCC) regulations.

Avoiding Excessive Surcharging

Australia has strict rules around surcharges, and as of 1 September 2017, small businesses must comply with new cost of acceptance standards. Your surcharge must not exceed the actual cost of accepting the payment.

In simple terms, this means you can’t charge your customers more than what you’re paying to process their transaction. Charging beyond your cost of acceptance is deemed excessive and isn’t allowed. Failing to comply can lead to fines, so it’s important to get your surcharges right from the start.

Which Payment Types are Covered by the Surcharge Rules?

The surcharge rules cover most popular payment methods, including:

• EFTPOS (debit and prepaid)
• MasterCard (credit, debit, and prepaid)
• Visa (credit, debit, and prepaid)
• American Express companion cards (AMEX cards issued through Australian financial service providers)

However, some payment methods are not covered by the rules, meaning you can set surcharges as you see fit for these options:

• BPAY
• PayPal
• Diners Club
• UnionPay
• AMEX cards issued directly by American Express
• Cash and cheques

It’s also important to remember that different businesses have different costs of acceptance. For example, accepting Visa or MasterCard through a Live Payments device typically costs between 0.5% and 2% of the transaction value, depending on your business type and the number of devices you use.

Setting Up Surcharging with Live Payments

Getting surcharging set up with Live Payments is easy. Whether you’re new to Live Payments or an existing customer, we can help you get started. When you sign up, simply ask your relationship manager about surcharging options. You’ll have the choice between differential surcharging (where each card type has a different fee) or blended surcharging (a single surcharge rate across all cards).

Already a customer but not yet surcharging? No problem. You can change your settings anytime by calling our support team or sending an email. Just provide your name, business name, and terminal ID, and we’ll get back to you with a solution tailored to your needs.

Contact Information

If you need help setting up surcharging or want to learn more about the options available, Live Payments is here to assist you.

• Phone: 1300 780 788
• Email: help@livepayments.com
• Sign-up Page: Sign up for Live Payments