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Category: Business, Economics and Finance / Banking / Industry

Reserve Bank and ACCC cracking down on credit card surcharges

Thursday, 26 May 2016 16:27:57

Companies like major airlines will no longer be able to charge excessive fixed price surcharges on tickets from September 1, 2017. (ABC News: Gary Rivett)

The Reserve Bank has announced regulations aimed at preventing merchants from gouging customers on credit card fees.

From September 1, surcharges passed on to consumers will have to reflect the actual cost to the merchant.

The rules will be enforced by the Australian Competition and Consumer Commission (ACCC).

"Businesses can only charge the cost of the customer using that debit or credit card, they can't make any money on it," ACCC chairman Rod Sims said.

"They can't charge excessively, they can just charge the cost, which is really just the cost of the terminal and the charge that the bank charges them for using the credit card."

The new standards will lower the cost of payments for retailers, meaning cheaper debit and credit card transactions for consumers.

"So basically if you're using a debit card you shouldn't be paying any more than about half of 1 per cent," Mr Sims said.

"If you are using a normal credit card you shouldn't be paying any more than 1 to 1.5 per cent, that's a Visa or Mastercard."

The new standard still preserves the right of merchants to enforce a surcharge for more expensive payment methods, but those using cards from designated systems like eftpos, MasterCard, Visa and the American Express companion system cannot be surcharged in excess of the merchant's cost of acceptance.

The RBA has singled out airlines in particular as being typical culprits of imposing high fixed amount surcharges on low-value transactions.

Consumer group Choice believes consumers have been ripped off by airlines and ticket merchants for years.

Its own investigation found some credit card booking fees are marked up by more than 1,000 per cent.

"Qantas, Virgin, Jetstar, Tiger, Ticketek, Ticketmaster, what they've been doing is when you pay with your credit card, instead of just recouping the cost of providing that service to you, they've been using it as a profit," Choice spokesperson Tom Godfrey said.

Small businesses have another year to fall into line, with regulations imposed on them from September 1, 2017.

AustraliaPlus


 

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