NSW fees probed
Print
A review has been launched after NSW overcharged millions in merchant fees - despite knowing it was illegal.
The New South Wales (NSW) Government says it is addressing a controversy involving unlawfully charged merchant fees by government agencies.
An estimated 92 million transactions incurred a total of $144 million in surcharges across Service NSW and Revenue NSW from 2016, despite legal advice that indicated these charges were unlawful.
The fees, which ranged from $0.29 to $1.92, were intended to cover costs imposed by payment providers but lacked necessary legislative backing.
The NSW Auditor-General reportedly identified the issue during the 2023-24 financial settlement for the Department of Customer Service (DCS), prompting the current government to act.
The advice from the Crown Solicitor, dating back to February 2016, deemed these surcharges illegal; however, the practice persisted until December 2022 under the former LNP government.
“It is deeply concerning that this practice has been ongoing, despite legal concerns being raised,” Minister for Customer Service Jihad Dib said this week.
“We will get to the bottom of what happened and why millions of people were unlawfully charged merchant fees,” Minister for Finance Courtney Houssos added.
The Minns Government has since established a taskforce to halt the surcharges, and over 90 per cent of online payments have now ceased to include such fees.
Physical card terminals, which require reprogramming, remain a challenge as fees continue to be phased out across Service NSW centres.
The NSW Ombudsman has launched an investigation under the Ombudsman Act 1974 into the possible maladministration of handling legal advice by Service NSW, DCS, and NSW Treasury.
Additionally, Houssos has referred the matter to the Independent Commission Against Corruption (ICAC) to examine any possible “serious maladministration”.
The former finance minister, Damien Tudehope, has denied any recollection of receiving advice about the illegality of merchant fees during his tenure from 2019 to 2023 but did not rule out its existence.
In response, Dib assured that measures are underway to provide alternate surcharge-free payment options, including cash payments and over-the-counter support.
Implications of the unlawful surcharges extend beyond NSW.
Legal experts are scrutinising the situation, considering similar cost-recovery practices in other jurisdictions that may be affected.
The federal government, too, has announced plans to review debit card surcharges pending guidance from the Reserve Bank of Australia.
NSW’s Treasury has directed all departments to report by 30 November on whether they impose merchant fees and whether they have the legal authority to do so.