Competition and Consumer Amendment (Payment Surcharges) Bill 2015

Thursday, 03 December 2015

Mr HAWKE (Mitchell—Assistant Minister to the Treasurer) (10:42): I move:

That this bill be now read a second time.

Today I introduce this bill to ban excessive and unfair payment surcharging by merchants.

This bill forms an integral component of the government's response to the Financial System Inquiry, and is delivering on our commitment to implement fairer outcomes for Australian consumers.

There is significant community concern around the abusive practice of excessive surcharging. Of the 6,500 submissions received by the Financial System Inquiry, more than 5,000 related to the opportunistic practice engaged in by some merchants to drive profits through card acceptances.

This government has listened to the community concern; and this government has chosen to take action.

We are committed to stamping out rapacious behaviour by a select number of merchants who choose to take advantage of Australian card users.

Where a merchant charges a customer a card surcharge, that carries with it an irrefutable representation that the merchant is seeking to recover his or her costs. While many merchants do pass on costs fairly, some merchants intentionally charge many times more than the true cost of accepting a credit card payment.

The coalition government believes consumers are entitled to a fair deal, which limits surcharging to genuine cost recovery. Consequently the government is taking action to ensure customers are charged no more than the amount that reflects the true amount of the merchant's costs in accepting that payment.

The government will not stop merchants from recovering their own costs of accepting cards—importantly.

That is reasonable, and it also helps to send a price signal to the community about the cost of competing kinds of payment facilities. However, profiteering by merchants under the guise of cost recovery will not be allowed by this government.

Each month around $45 billion of purchases are processed through more than half a billion card transactions. Given the widespread problem of excessive surcharging, this measure will therefore provide considerable savings overall to Australian consumers.

This bill will amend the Competition and Consumer Act 2010 and ban merchants from engaging in excessive surcharging of customers for use of a particular payment method. A surcharge will be excessive where it exceeds the costs that merchants are charged by their payment provider for using that payment method.

We will put in place a flexible framework that government and regulators can adjust to changing circumstances. The bill allows for a broad range of payments to be covered by the surcharging restriction either by the Payments System Board making a surcharging standard in relation to a payment system or by a regulation made under the Competition and Consumer Act.

For most payment types, the Reserve Bank will be responsible for setting the boundaries of the application of the scheme and the permitted surcharge that applies for each payment type. However, provision is made for these matters to be determined by regulation if necessary for any reason in the future.

With technological innovation bringing new types of payment methods into the market, maintaining flexibility in the application of this regulatory regime is important.

The Reserve Bank will begin public consultation this week on standards that may be made for this purpose.

This measure, apart from establishing a framework for protecting consumers, will also empower the Australian Competition and Consumer Commission to enforce the ban on surcharging. The ACCC shall be given new powers to gather information from those involved in the payments process and the authority to issue infringement notices against those engaging in excessive surcharging.

The ACCC will be able to require merchants and other payment system participants to provide documents or information to help it assess the costs incurred against any surcharges imposed by a merchant. It will be an offence to fail to provide the documents or information requested by the ACCC.

If the ACCC forms the view that a merchant has engaged in excessive surcharging, the ACCC may issue an infringement notice including a penalty for listed corporations of up to 600 penalty units, currently $108,000, for each alleged contravention.

So, these new rules do not merely establish a 'best practice' framework but contain real teeth to achieve targeted and meaningful behavioural change.

These are real protections for customers and consumers.

This reform is both good for consumers and good for the overall efficiency of retail and wholesale markets, as it will allow for a fairer reflection of the costs of different payment systems.

As new, smart and innovative methods of payment are developed and rolled out, this government wants to ensure that Australia has a system in place where they can compete on a level playing field with other payment systems, rather than being subjected to inaccurate overstatements to consumers of their actual costs through excessive surcharging.

We want to remove any disincentives or discouragements for commercial activity.

Of course, if a merchant faces a high cost for accepting a certain type of payment, they are still entitled to pass that cost on. Otherwise, consumers using lower cost methods of payment will effectively subsidise those using higher cost payment methods like premium cards.

A merchant should however never be able to give a false impression that certain payment methods cost more than they actually do and profit as a result. We never want consumer behaviour to be distorted by these practices.

This legislation will ensure that they cannot legally do so, and will put the ACCC on the beat to ensure that they do not.

I commend the bill to the House.