Service NSW customers illegally charged $144m in merchant fees

Millions of NSW residents have been illegally charged $144 million across 92 millions transactions with Service NSW. Find out what it means for you.

Millions of Service NSW customers across NSW have illegally been charged more than $144 million in merchant fee surcharges for 10 years for transactions such as car registration or paying fines.

The illegal practice has occurred across 92 million transactions made with Service NSW and Revenue NSW since 2016, despite the former Coalition government receiving advice that it was unlawful.

Customers are charged merchant fee surcharges to cover transaction fees charged by payment providers such as banks.

Customers applying for a marriage certificate or trying the renew their car registration were illegally charged typical surcharges around 30 cents to $1.92 depending on the transaction.

Service Minister Jihad Dib and Finance Minister Courtney Houssos have written to the NSW Ombudsman requesting an investigation. Picture:NewsWire/ Monique Harmer

The Minns government currently estimates that the 92 million transactions unlawfully incurred about $144 million in merchant fees since 2016.

The NSW government has immediately shut down the unlawful fees for 90 per cent of online transactions and has set up an incident management taskforce to stop the rest. Surcharges for the most popular Service NSW transactions like renewing a drivers license have now been turned off.

The unlawful practice of charging the fees was first flagged to the NSW government between February 2016 and December 2022 by the Crown Solicitor’s office. Despite this advice, the government continued the practice.

Treasurer Daniel Mookhey, Customer Service Minister Jihad Dib and Finance Minister Courtney Houssos have written to the NSW Ombudsman requesting an investigation into possible serious maladministration.

The matter has also been referred to the Independent Commission Against Corruption.

Despite the error the Minns government refused to say whether the government would reimburse customers for the funds.

Mr Dib said the government were still working out what the options were for customers would be but could not answer questions as to whether the $144 million would be reimbursed.

“We know that people have been put in a situation not of their making so we’ll be looking at a variety of different options here,” he said.

Mr Dib said that some customer who made many transactions with Service NSW would have paid far more in surcharges than others.

Ms Houssos said the government’s immediate priority was to cease all the unlawful charges.

“We will get to the bottom of what happened and why millions of people were unlawfully charged merchant fees,” she said.

“Families, households and businesses expect governments to conduct themselves lawfully. That’s why all agencies have been instructed to examine their own processes.

“I find these revelations extremely concerning and I can’t see how there is an excuse for a government agency to be repeatedly advised that an activity is unlawful and to continue doing it.”

Shadow Liberal Treasurer Damien Tudehope said in his time as the former Finance Minister under the previous government he had never received advice that the surcharges were unlawful.

“To the best of my knowledge I don’t recall receiving any advice that the passing on of merchant fees by Service NSW was illegal,” he said.

“I’m not denying it exists … if I had seen that advice I would have raised it immediately with the relevant organiser.”

Mr Tudehope said if the legal advice given to the government departments at the time had not been passed onto the relevant Ministers it “was not good enough” and called on the Minns government to refund customers.

“Clearly it is not good enough if a government agency is collecting fees which … they shouldn’t be collecting and they have advice they shouldn’t be collecting, not only should they take steps to immediately stop doing it, they should take steps to immediately start refunding it and they should advise the Minister,” he said.

Originally published as Service NSW customers illegally charged $144m in merchant fees