NSW government takes action after customers illegally charged merchant fees

The issue was identified by the NSW Auditor-General when settling the Department of Customer Service (DCS) financial statements for 2023-24 and brought to the attention of the current government.

Current DCS Secretary Graeme Head has requested further information from his department, which revealed that Service NSW’s practice of charging fees to traders had been flagged as unlawful in legal advice received from the Crown Solicitor’s Office between February 2016 and December 2022. Despite this, the merchant fees continued to be passed on to customers.

Additional merchant fees are levied to recover transaction fees charged by payment providers, including banks. Recovery of the cost of merchant fees was ordered by the NSW Treasury in 2012.

Typical surcharges on Service NSW transactions include 30 cents for a one-year license renewal, 29 cents for a marriage certificate and $1.92 to renew the registration of a small car (such as a Toyota Corolla). The average surcharge on a Revenue NSW payment in 2023-24 was $0.92.

It is currently estimated that 92 million transactions illegally generated approximately $144 million in merchant fees from 2016 in Service NSW and Revenue NSW.

The Minns Labor Government has established an incident management task force and is continuing urgent work to end illegal charging of fees to traders.

People who have been charged fees are encouraged to sign up to receive updates on the government’s response at service.nsw.gov.au/about-us/our-services/merchant-fees or by calling Service NSW on 13 77 88.

The Treasurer, the Minister for Customer Service and Digital Government and the Minister for Finance have written to the NSW Ombudsman to request an investigation into possible serious maladministration.

The DCS secretary also referred the matter to the Ombudsman and the Independent Commission Against Corruption, highlighting the apparent failure to act on the Crown Solicitor’s 2016 advice.

The DCS-led taskforce has removed fees charged directly by Revenue NSW and the Rental Bond Board, and stopped fees on more than 80 per cent of Service NSW transactions.

Merchant fee surcharges have been removed for more than 90% of online payments, including Service NSW’s top 12 transactions, such as renewing a driver’s license or registering a vehicle or payment of a fine.

Service NSW is urgently continuing its work to remove fees on all remaining transactions, including on thousands of credit card terminals at Service NSW service centers. These transactions span multiple technology platforms and are carried out on behalf of multiple agencies.

While this work is in progress, other payment methods are available that do not incur a surcharge, such as paying at a service center by cash or online with Service NSW staff counter assistance.

The majority of government transactions take place through Service NSW, but following the discovery of this information, all departments have been instructed to report to the NSW Treasury by November 30 whether they charge merchants fees for services and confirm that they have legal authority. to do it.

Quotes attributable to Minister of Customer Service and Digital Government, Jihad Dib:

“Our most immediate priority has been to bring these charges to an end as quickly as possible. »

“It is deeply concerning that this practice continues, despite the legal concerns raised. »

“Although the individual amounts typically charged may seem small, they were charged illegally. »

“The community rightly deserves an explanation as to how this could have continued for so long under the previous government. »

Quotes attributable to Finance Minister Courtney Houssos:

“We moved quickly to create a task force to address this issue. Our immediate efforts are aimed at disabling payment methods that charge merchants these fees as quickly as possible.

“We are going to get to the bottom of what happened and why millions of people were illegally charged merchant fees.

“Families, households and businesses expect governments to behave within the law. “That’s why all agencies have been tasked with reviewing their own processes.”