New Surcharge Law Affects Restaurants And Cafés
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New Surcharge Law Affects Restaurants And Cafés

December 4, 2017

New Surcharge Law Affects Restaurants And Cafés
Check your mail, restaurant and café owners. Banks are now required to send monthly merchant statements containing the cost of acceptance for payment methods covered by the new surcharge law. Your restaurant or café must comply with the new law by imposing a surcharge that does not exceed each payment method’s cost of acceptance. The new surcharge law took effect on 1 September 2017.

Credit Card and Debit Card Surcharge Explained

Let’s say that a family’s members order eggs benedict, waffles, juice and coffee from an all-day breakfast restaurant. At the counter, they pay for the meals with a credit card. The restaurant can charge them an extra fee on top of the price of the food. This additional fee is the credit card surcharge, and it covers the cost of processing the credit card as a means of payment.

The new surcharge law affects the following payment methods:
  • Eftpos (debit and prepaid)
  • MasterCard (credit, debit and prepaid)
  • Visa (credit, debit and prepaid)
  • American Express companion cards (issued through an Australian financial service provider)

The following payment methods are exempt from the new surcharge law:
  • BPAY
  • PayPal
  • Diners Club
  • UnionPay
  • American Express (issued directly by American Express)
  • Cash
  • Cheques

Calculating Your Cost of Acceptance

Bank Fees + Additional Permissible Costs = Cost of Acceptance

The bank fees of your restaurant or café include merchant service fees, POS terminal rental and maintenance fees and other card processing fees. The standard cost of acceptance fee for each payment method is written on your bank merchant statement. 

You have the option of including additional permissible costs to your standard cost of acceptance. Additional permissible costs are paid to third party providers and include gateway fees, fraud prevention costs, forward delivery risk insurance costs and third party POS terminal rental or maintenance fees. Keep in mind that your total cost of acceptance does not include your restaurant or café’s internal costs, such as labour costs and electricity costs.

Here is an example. Let’s say that your restaurant accepts Eftpos, MasterCard, Visa and American Express cards. According to your monthly merchant statement, your costs of acceptance for various payment methods are the following:

Visa Debit = 1%
Visa Credit = 1.5%
MasterCard Debit = 1.8%
MasterCard Credit = 2%
American Express = 2.5%

If a customer pays for her meal with a Visa credit card, your business can impose a surcharge of 1.5% or lower. If another customer pays with an American Express card issued by an Australian financial service provider, your surcharge must not exceed 2.5%.

Charging a Flat Fee Surcharge for All Payment Methods

It’s up to you if you want to charge a single surcharge for all payment methods affected by the new surcharge law. In that case, you must impose the lowest cost of acceptance among the different payment methods. Let’s use our previous example to calculate a flat fee surcharge. In compliance to the new surcharge law, your restaurant must impose a flat fee that does not exceed 1% - the lowest cost of acceptance among your restaurant’s payment methods. 

Penalties for Non-Compliance

The Australian Competition & Consumer Commission (ACCC) can issue penalties to businesses that do not follow the new surcharge law. They can issue infringement notices with penalties of up to $12,600 to body corporate or $126,000 to corporations. The ACCC can also charge pecuniary penalties of up to $1,358,910 per contravention, injunctions and other orders.

Download the business guide below for more information about the new surcharge law. Contact Restaurant Bookkeepers Australia for advice from bookkeeping experts in the hospitality industry.

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