Have you registered a car, renewed your licence, applied for a marriage certificate, or paid a parking fine by credit card between February 2016 and December 2022?
If so, you were illegally charged merchant fees by the NSW Government.
State Finance Minister Courtney Houssos advised that two government agencies –Service NSW and Revenue NSW collected around $144 million in merchant fees since 2016, which is about 92 million card transactions.
In 2016, Government News quoted the then Finance, Service and Property Minister Dominic Perrottet as saying:
“Merchant facility costs on credit card payments, currently met by taxpayers, will now be passed on to customers, in line with other government agencies,” Read the full article here.
How Was the Issue Identified?
The NSW Auditor-General identified the issue during their review of the Department of Customer Service (DCS) financial statements for 2023-24 and brought the illegal charging to the attention of the NSW Minns Labor Government.
The current Secretary of DCS, Graeme Head, sought further information from his department, revealing that Service NSW’s practice of charging merchant fees had been flagged as unlawful in legal advice received from the Crown Solicitor’s Office between February 2016 and December 2022.
Despite receiving this advice three times, the NSW government continued to charge merchant fees. It is unlawful for NSW government departments to charge merchant fees for card transactions unless they obtain specific legal authority to do so.
The Minns Labor Government has established an incident management taskforce and is progressing urgent work to shut down the unlawful charging of merchant fees.
What is the Typical Merchant Fee Surcharge?
Typical surcharges on Service NSW transactions include 30 cents for a 1-year licence renewal, 29 cents for a marriage certificate and $1.92 to renew registration for a small car (like a Toyota Corolla). The average surcharge on a Revenue NSW payment in 2023-24 was $0.92. It has been estimated that NSW residents would have paid about $30 in unlawful fees.
Merchant fee surcharges have been switched off for more than 90 per cent of online payments, including the top 12 Service NSW transactions such as renewing a driver licence or vehicle registration or paying a fine.
How Do I Find Out More?
People charged fees are encouraged to register for updates on the Government’s response at www.service.nsw.gov.au or by calling Service NSW on 13 77 88. To register for updates, visit Changes to merchant fees. You may want to review fees you have paid to Service NSW and Revenue NSW during the period Feb 2016 and December 2022 – particularly if you have paid numerous parking fines (like fines issued by the Lane Cove Council for exceeding the time limits in Lane Cove Council-operated car parking stations). Read our article here about Revenue NSW processing lane cove parking fines.
NSW Ombudsman and ICAC Referral
The Treasurer, Minister for Customer Service and Digital Government, and Minister for Finance have written to the NSW Ombudsman requesting an investigation into possible serious maladministration.
The Secretary of DCS has also referred the matter to the Ombudsman and the Independent Commission Against Corruption, noting the apparent failure to act on the 2016 Crown Solicitor’s advice.
The taskforce led by DCS has switched off fees being charged directly by Revenue NSW and the Rental Bond Board and stopped fees on more than 80 per cent of Service NSW transactions.
NSW Government Response
Minister for Customer Service and Digital Government Jihad Dib said:
“Our most immediate priority has been to stop these charges as quickly as possible.”
“It is deeply concerning that this practice has been ongoing, despite legal concerns being raised.”
“While the individual amounts typically charged may appear to be small, they have been charged unlawfully.”
“The community rightfully deserves an explanation about how this was allowed to continue for so long under the previous government.”
What is the Impact?
Service NSW is urgently continuing work to switch off fees on all remaining transactions, including thousands of credit card terminals in Service NSW Service Centres. These transactions span several technology platforms and are conducted on behalf of multiple agencies.
While this work is being completed, alternate payment methods are available which do not incur a surcharge, such as paying in a Service Centre by cash or online with over-the-counter support from Service NSW staff.
Many Government transactions take place through Service NSW, but because of this information being uncovered, all departments have been instructed to report to NSW Treasury by 30 November on whether they charge merchant fees for services and to confirm they have the legal authority to do so.
Minister for Finance Courtney Houssos said:
“We have acted swiftly to establish a taskforce to deal with this issue. Our immediate efforts are focused on switching off the payment methods that charge these merchant fees as quickly as possible.
“We will get to the bottom of what happened and why millions of people were unlawfully charged merchant fees.
“Families, households and businesses expect governments to conduct themselves lawfully. That’s why all agencies have been instructed to examine their own processes.”
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