NSW Takes Decisive Steps Against Unlawful Merchant Fee Practices
NSW Takes Decisive Steps Against Unlawful Merchant Fee Practices
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The New South Wales (NSW) Government is taking robust measures to rectify years of unlawful merchant fee surcharges on customer transactions.
Despite ongoing legal concerns, these fees persisted for nearly a decade, a legacy of policy directives laid out by the former Liberal-National government.
During a review of the 2023-24 financial statements, the NSW Auditor-General highlighted the issue of unauthorized fee surcharges. The revelations were surprising, bringing the matter forcefully to the notice of the current administration.
For years, legal advice from the Crown Solicitor's Office, beginning in February 2016 through December 2022, consistently warned against the unlawful imposition of merchant fees by Service NSW. Despite such advice, over 92 million transactions incurred charges close to a whopping $144 million. The surcharges, conceptualized as cost recovery for transaction fees by payment providers, were initially sanctioned by NSW Treasury in 2012.
The spotlight is on mini transactions such as 30 cents for a driver's licence renewal, 29 cents for a marriage certificate, and a $1.92 fee to renew a small car registration. These seemingly small fees added up, creating a significant financial burden on the public.
With this information now public, the current government, led by the Minns Labor administration, has moved swiftly, creating a dedicated incident management taskforce to stem these unauthorized charges and to mitigate future occurrences.
Notably, customers affected by these charges are urged to register for updates regarding the government's corrective measures through Service NSW channels either online at the official website or via their service hotline.
The Ministers for Customer Service, Digital Government, and Finance, have sought an independent inquiry by requesting the NSW Ombudsman to investigate potential maladministration. The department's Secretary has also escalated the case to the Ombudsman and the Independent Commission Against Corruption, highlighting concerns over ignored legal advice.
A proactive approach by the new taskforce has successfully shut down over 80% of unlawful surcharges in Service NSW transactions and more than 90% of online payments. For now, all other remaining transaction fees, including those from in-person credit card terminals, are being rapidly phased out. To accommodate citizens, Service Centres are offering surcharge-free payment alternatives, such as cash payments.
Amid ongoing remedial undertakings, the NSW government has instructed all departments to audit their merchant fee practices by the end of November to ascertain legal oversight and compliance, echoing Minister for Finance Courtney Houssos’s comments: “Families, households, and businesses expect governments to act within the confines of the law.â€
Minister Jihad Dib also emphasized the urgency, stating: “Our priority has been to halt these charges swiftly.†He underscored the ethical need for transparency regarding the past continuation of these fees despite the legal advisories.
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Negative Amortization: A situation in which the loan payment for any period is less than the interest charged over that period, causing the loan balance to increase.
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