Question: Who picks up credit card processing costs when the surcharge ban takes effect on 1 October?
Answer: If your scheme keeps card payments after 1 October, the cost moves from the owner who used the card to the owners corporation, funded by all owners in proportion to unit entitlement.
Some background first, because none of this came from strata legislation.
The Reserve Bank has spent the past couple of years reviewing what it costs merchants to accept card payments. As part of that reform, it removed the rule that had prevented Visa, Mastercard and EFTPOS from banning surcharges, and all three have since confirmed they will prohibit surcharging from 1 October 2026. American Express has decided to do the same. From that date, a business accepting a card payment can no longer add a separate fee to the payer’s transaction to recover the cost of accepting it. The cost sits with the business.
Strata law hasn’t changed at all. What has changed is the payment rules everyone operates under, and that flows straight through to how contributions (levies) get paid.
If your scheme still has card payments available after 1 October, every owner pays for them through the budget, in proportion to unit entitlement. The cost does not disappear when the surcharge does. It moves from the owner who used the card to the owners corporation.
What is changing, and for whom
The two payment facilities most commonly used for contributions in NSW have taken different approaches.
DEFT is withdrawing card payments. From the changeover date, you cannot pay by credit or debit card, and any recurring payment already scheduled on a card is cancelled rather than moved across. Owners are directed to PayID, BPAY, bank-account direct debit or Post Billpay instead.
StrataPay is keeping cards available, but only where the owners corporation opts in and accepts the processing cost. Without that decision, card payments stop there too.
So the first question for any owner is not “who pays” but “which facility does my scheme use”, because for a large number of schemes there will be no card option at all and no decision to be made about it.
The cost cannot be charged back to the card user
Where cards are retained, this is the point committees raise first, and the answer is no.
Section 83(2) of the Strata Schemes Management Act 2015 (the Act) provides that “contributions levied by an owners corporation must be levied in respect of each lot and are payable, subject to this section and section 82, by the owners in shares proportional to the unit entitlements of their respective lots.”
Contributions follow unit entitlement. The only exception in that Division is section 82, which deals with a lot attracting a greater insurance cost. How an owner chooses to pay is not a basis for charging that owner more than anyone else.
A by-law will not solve it either. In The Owners – Strata Plan No 60919 v Consumer, Trader and Tenancy Tribunal [2009] NSWSC 1158, the Supreme Court held that a by-law requiring only some owners to pay additional contributions was beyond power, because an owners corporation cannot levy contributions other than in accordance with what is now section 83. Even with perfect drafting, the card scheme rules that prohibit surcharging from 1 October would still apply.
The practical result is a cross-subsidy. Owners paying by BPAY, PayID or bank-account direct debit fund the processing costs of owners paying by card.
If cards are retained, it is a general meeting decision
Accepting card processing costs creates a new recurring expense funded by all owners in proportion to unit entitlement. It belongs in the estimates prepared under section 79 and in the contributions set under section 81, which makes it a decision for owners at a general meeting rather than one taken for them at committee level.
For a large strata scheme there is a further trap. Section 102 limits the owners corporation to spending no more than 10% above the amount estimated for that item at the annual general meeting. Card processing costs are demand-driven, and removing the surcharge tends to increase card use rather than leave it flat, so an estimate built on last year’s card volume can be exceeded quickly.
Moving to another facility is a bigger job than it sounds
Some owners will ask why their manager doesn’t simply move to a provider that still offers cards.
Changing levy payment facility means new biller codes for every scheme. Every owner’s saved payee details stop working. Existing direct debit authorities have to be re-established rather than transferred. Contribution notices reissue with new payment details, and the facility is usually tied to the bank holding the trust account, so it is rarely a standalone decision.
Which facility an agency uses is the strata manager’s decision about its own systems, made across a whole portfolio rather than scheme by scheme. Rebuilding all of that in a matter of weeks, to preserve a payment method that now carries a cost to owners, is a difficult proposition.
The risk nobody is talking about
Where an owner has a recurring contribution payment funded by a credit or debit card, that arrangement is cancelled on the changeover date. It is not switched across to their bank account for them.
An owner who set one up years ago and hasn’t thought about it since can fall into arrears without making any decision at all, and section 85(1) interest then runs at 10% per annum. If you pay your contributions on a card, check now and re-establish the payment from a bank account before the cut-off date that applies to you.
Was strata overlooked in all this?
Not exactly. The argument was made, and it was lost. Strata Community Association asked the Reserve Bank for a strata exemption during the consultation, arguing that an owners corporation is a non-profit collective rather than a commercial merchant. Strata was not singled out. The Board received exemption requests from a range of sectors. Generally, it declined them, taking the view that carve-outs would significantly complicate the framework and that merchants are expected to build payment costs into their headline prices.
In strata, the headline price is the budget. That is exactly where this cost now lands.
What to do before 1 October
Your contribution notice will tell you which facility your scheme uses, so start there before you contact anyone. Then ask your strata manager which date applies to you. The dates are not uniform, and some managers have transitional arrangements running into 2027. If you pay by card, arrange an alternative now rather than in the first week of October. If your scheme is on StrataPay and owners want card payments retained, that needs to go on a general meeting agenda.
This is general information about the operation of the legislation and not legal or financial advice. Check your scheme’s registered by-laws and the position of your own payment facility, and seek advice on your particular circumstances.
This post appears in Strata News #810.
Tim Sara Sara Strata E: tim@sarastrata.com.au P: 04 8500 7960
