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Is offering “Less for Cash” still legal in Australia?

less for cash

Recently, the ban on charging consumers excessive payment surcharges came into play for all businesses across Australia.

This ban is designed so that a business does not pass on payment surcharges to consumers above what they were charged themselves. Is “Less for Cash” part of this ban?

Businesses incur costs for offering payment facilities to their customers including EFTPOS, and credit card charges. The ban previously covered large businesses, and now the ban is enforceable for all businesses that are either based in Australia or use an Australian bank.

When the ban became enforceable for all businesses, the ACCC Deputy Chair, Dr Michael Schaper said, “The good news for consumers is that businesses can now only surcharge what it actually costs them to process card payments, including bank fees and terminal costs. For example, if a business’s cost of acceptance for Visa Credit is 1.5 per cent, consumers can only be charged a surcharge of 1.5 per cent on payments made using a Visa credit card”. Source: ACCC media release 310817

In an era where margins in many businesses were (and still are) being squeezed, some businesses made up for the reducing product margins by charging additional so called “transactional fees” to the consumer.  An airline for example may offer a $59 trip to New York (I wish) and then charge the consumer a $20 processing fee to pay via credit card.  It was one of the so called “drip pricing” methods of increasing overall profit on a sale, particularly where consumers were comparing prices for the product itself, and not the overall invoice total for purchasing a product.

Businesses now have to be very careful that they are only passing on to consumers no more than what they are being charged themselves. The window for making additional profit at the backend of the transaction has become very slim and businesses that have been relying on these types of additional transaction costs will need to look for other methods to bump up their profit.

The new ban comes with many guidelines, which you can find on the ACCC (Australian Competition & Consumer Commission) website.  An interesting rule based on the ban is that if a business wants to have one surcharge and not a variety of surcharges depending on the transaction type, then they cannot just have one surcharge based on the average of all fees charged to them.

For example, Visa, MasterCard and American Express cards may charge fees to businesses at a variety of rates, such as 1%, 1.5% or 2% etc.  If a business wants to charge a single surcharge fee to its consumers, then it must not exceed the lowest fee charged to the business for any type of transaction.  In this example, the maximum surcharge they can charge is 1% if the business is charging a single surcharge fee for any payment method.


What about “Less for Cash”?

What about it?, I hear you say.  How is “Less for Cash” even remotely connected with this ban?

Well, let’s consider the following example:

John Burke Less for Cash Article

In this example, they are charging $90 for cash purchases and $100 for anyone else. It raises the following questions relating to the ban:

1) If the business that advertises this fantastic sounding product offers 10% off for strictly cash, are they in effect charging a surcharge for anyone that is paying by any other method?

2) And if this $10 gap between paying via cash and credit for example is considered a surcharge, then this differential in this instance is well above the costs of providing the facilities to transact the sale, and based on the new ban, would it still be legal?

I spent some time researching everywhere I could think of.   My research included looking for answers in academic articles, the legislation and also on the ACCC website. You would think it would be fairly easy to find, but I had no success.  I decided to email the ACCC and it wasn’t long until I received a reply, though it did not shed much more light.

Dear John

Thank you for writing to us about the excessive payment surcharge ban and “less for cash” discounts. We can offer you information about the ban. We cannot confirm if “less for cash” discounts fall under the ban, as they do not appear to be mentioned in the legislation.

If you would like to see this practice included in future legislation, we suggest speaking to your local Federal MP.

Yours sincerely


Public Information Officer | Infocentre
Australian Competition and Consumer Commission www.accc.gov.au

In their reply, they also included additional information which was general information about the ban.  A copy of the full reply from ACCC is available via the following link: Link to ACCC Reply.

I appreciate the ACCC taking the time to respond. It makes sense, well sort of. The ACCC did validate why my endless searching was not rendering results based on the new ban on charging consumers excessive payment surcharges. Maybe relating “less for cash” was too long of a bow to link to the new ban.

However, if the consumer believes that they are being charged $10 extra, just because they are not paying cash, then how is the $10 treated? Is it a surcharge or just a missed opportunity for the consumer not willing to pay physical cash?

It seems that at this stage, it is okay to continue using “Less for Cash”. Nevertheless, I remain in two minds about linking “Less for Cash” in relation to the new ban. If the $10 from the example is not called a surcharge, then what is it? Fair enough that the $10 has only a minor connection with passing on a specific fee from the businesses transaction process supplier, but it is still a surcharge for paying other than cash.

I will continue my research, but I don’t think I’ll bug my local Federal MP.

John Burke

This is a brief summary and is written for the purpose of discussion only and is not to be taken as legal advice. It is not possible to cover all the details as some subjects covered in articles can take a minimum of several hours to discuss in a pricing training session. All readers should seek their own independent legal advice. References sourced from ACCC (www.accc.gov.au)