Credit card charges are expected to be introduced from 22 March 2014 by DIBP on all its fees and charges. RMAs should properly adjust their costing disclosures to clients to reflect the expected price increase noting that the RBA allows for ‘reasonable costs’ to be recovered.

In aligning itself to commercial practice and improve its bottomline, DIBP has decided to recover credit card merchant fees from clients by adding a surcharge on credit card payments for all payments to DIBP. The surcharge could boost DIBPs bottomline by $14 million a year.

DIBPs financial statements indicate that despite a revenue of about 1.48 billion in FYE 2012-2013, its expenses, which largely come from border protection spending, led to a deficit of about $94 million for the year.

DIBP has not provided any indication of what the additional charges will be. Commercial operations charges vary widely and may range between 1.5% and 3% (sometimes even more). However, government agencies’ rates are generally half of that range. For instances, currently the Australian Tax Office (ATO) charges credit card merchant fees for payments at the rate of 0.42% for Visa and MasterCard payments and 1.45% for payments by American Express cards. DIBP is expected to announce its rates soon.

RMAs who accept credit card payments for their fees and other payments should be aware that they are allowed to recover ‘reasonable fees’ for credit card usage from their clients pursuant to the Reserve Bank of Australia (RBA) guidelines

The RBA guidelines state the fees you can recover from a client include, “the additional costs, which in addition to the merchant service fees might form part of the reasonable cost of acceptance,"

These costs may include, but are not necessarily limited to:

1. Other costs payable to acquirers. These may include fees for the rental and maintenance of payment card terminals, scheme fees incurred in processing card payments and levied by the acquirer (e.g. international service assessments or cross-border transaction fees), and other fixed fees for providing payment acquiring equipment and services (e.g. access fees, minimum transaction fees and other monthly or annual fees).
2. Costs payable to other payment service providers. These may include gateway fees, switching fees and fees for the provision of equipment and/or services required to accept card payments.
3. Merchants' own costs related to card acceptance. These may include the cost of purchasing and maintaining their own card acceptance infrastructure, scheme fees levied on the merchant by the scheme, and line rental and communications charges related to the use of payment card terminals.
4. Any other costs that are incurred only for the acceptance of cards of the relevant schemes and not other payment methods.

The examples of costs outlined above (including the merchant service fee) should be calculated net of any rebates from either the acquirer or the issuer. Any costs applying to multiple payment methods should be apportioned, as far as possible, pro-rata based on the transaction volumes attributable to each payment method (e.g. the cost of card terminals should be apportioned between the card schemes that use those terminals) and to the extent the apportioned costs have not already been included in the cost of acceptance for another payment method.”