2014-03-25 Planning & Organisation Committee Agenda Pages 168-231

PLANNING & ORGANISATION COMMITTEE MEETING AGENDA                                  25 MARCH 2014


Merchants are permitted to recover the “reasonable cost of card acceptance”, and the Reserve
Bank of Australia has issued guidelines to clarify the range of acceptable costs. This translates to
Council being able to recover actual costs for providing the service; but with different fee
structures applicable to different payment channels, it is proposed to impose a surcharge based
on the minimum cost incurred, being 0.55% (including GST).

The Reserve Bank has also published a schedule of average merchant fees that provides a basis
for comparative analysis since 2003. It is noted that the current average charge for Visa and
MasterCard (as at December 2013) is shown as 0.83%.

With more and more people utilising credit cards for the payment of rates and charges, and with
many merchants imposing a range of card surcharges, it is not expected that there will be any
consumer backlash as a result of passing on this cost to those customers choosing to use this
payment option.

The following table shows the estimated surcharge that would apply for different transaction
levels based on a charge of 0.55%.

       Payment Value            Estimated Surcharge
                $100                          $0.55
                $200                          $1.10
                $400                          $2.20
                $800                          $4.40
              $1,600                          $8.80
             $20,000                        $110.00
            $100,000                        $550.00

The higher values are shown as an indication of the cost for potential payments for high-level
transactions, such as development applications and contributions.

To implement the charge it will be necessary to contact each of the current agency providers and
to also make configuration changes to Council’s administration software. It is recommended to
implement the system away from any major rates or charges levy to ensure the system can be
bedded down prior to any peak payment activity.


Previous Council Consideration

Nil.

Finance & Risk

Council’s annual budget is expected to yield approximately $75 million in rates, charges and
fees. If 30% of all payments are made on credit cards, the proposed 0.55% surcharge will
recover costs of $123,750.




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