Rip-off credit-card fees get the flick
From: The Australian
June 12, 2012 9:03PM
SHOPS, airlines, taxis and websites will be banned from socking customers with "excessive" surcharges to pay by credit card, the Reserve Bank ruled yesterday.
Merchants will only be allowed to charge consumers a fee that covers the "reasonable cost of card acceptance", under new RBA rules to start on January 1.
Visa and MasterCard yesterday welcomed the RBA's decision, taken after a six-month inquiry into allegations that retailers were profiteering from inflated credit card fees.
The RBA singled out e-tailers, taxis, restaurants and the holiday, hospitality and hire industries for imposing high surcharges.
An RBA survey reveals that large merchants are charging customers about twice as much to use credit cards as what the merchants are charged by the banks to process credit-card payments.
"In recent years, concern has been expressed to the (Reserve) Bank that some merchants may be using surcharging as an additional means of generating revenue," the RBA says in its regulation impact statement.
"There is also evidence to suggest that there are certain industries or payment channels where surcharging well in excess of merchant service fees is quite common . . . often (there are) few genuine alternatives to payment by a credit or scheme debit card."
The rules will limit card surcharges to covering the cost of merchant service fees, which are charged by the banks, as well as the cost of renting, buying or maintaining credit-card terminals, and line rental and communications charges.
Credit-card surcharges vary from the $7.70 a passenger charged by Qantas, to $5.50 for online travel booking company Wotif and to 10 per cent for taxi fares paid through Cabcharge.
Telstra charges 1 per cent for Visa, MasterCard and Amex, and 2 per cent for Diners Club -- plus GST -- while Aldi supermarkets charge 1 per cent and power company Origin charges 0.6 per cent.
Banks charge retailers an average of 0.81 per cent of the transaction price to use MasterCard or Visa, 1.88 per cent for Amex and 2.1 per cent for Diners Club.
Qantas said yesterday it would review the changes and "respond in due course".
"As we've always said, our surcharges do not recover more than it costs us to offer credit-card payments, so we do not consider them unreasonable," a Qantas spokesman said.
Consumer group Choice declared it would be a watchdog to ensure "the credit-card surcharge cash cow can no longer be milked".
Visa announced it would amend its operating regulations to prevent any surcharge above the "reasonable cost" to the merchant.
MasterCard said it would "monitor and enforce" the new RBA rule, to "stamp out the practice of profiteering".
http://www.theaustralian.com.au/bus...es-get-the-flick/story-e6frg8zx-1226393520724
From: The Australian
June 12, 2012 9:03PM
SHOPS, airlines, taxis and websites will be banned from socking customers with "excessive" surcharges to pay by credit card, the Reserve Bank ruled yesterday.
Merchants will only be allowed to charge consumers a fee that covers the "reasonable cost of card acceptance", under new RBA rules to start on January 1.
Visa and MasterCard yesterday welcomed the RBA's decision, taken after a six-month inquiry into allegations that retailers were profiteering from inflated credit card fees.
The RBA singled out e-tailers, taxis, restaurants and the holiday, hospitality and hire industries for imposing high surcharges.
An RBA survey reveals that large merchants are charging customers about twice as much to use credit cards as what the merchants are charged by the banks to process credit-card payments.
"In recent years, concern has been expressed to the (Reserve) Bank that some merchants may be using surcharging as an additional means of generating revenue," the RBA says in its regulation impact statement.
"There is also evidence to suggest that there are certain industries or payment channels where surcharging well in excess of merchant service fees is quite common . . . often (there are) few genuine alternatives to payment by a credit or scheme debit card."
The rules will limit card surcharges to covering the cost of merchant service fees, which are charged by the banks, as well as the cost of renting, buying or maintaining credit-card terminals, and line rental and communications charges.
Credit-card surcharges vary from the $7.70 a passenger charged by Qantas, to $5.50 for online travel booking company Wotif and to 10 per cent for taxi fares paid through Cabcharge.
Telstra charges 1 per cent for Visa, MasterCard and Amex, and 2 per cent for Diners Club -- plus GST -- while Aldi supermarkets charge 1 per cent and power company Origin charges 0.6 per cent.
Banks charge retailers an average of 0.81 per cent of the transaction price to use MasterCard or Visa, 1.88 per cent for Amex and 2.1 per cent for Diners Club.
Qantas said yesterday it would review the changes and "respond in due course".
"As we've always said, our surcharges do not recover more than it costs us to offer credit-card payments, so we do not consider them unreasonable," a Qantas spokesman said.
Consumer group Choice declared it would be a watchdog to ensure "the credit-card surcharge cash cow can no longer be milked".
Visa announced it would amend its operating regulations to prevent any surcharge above the "reasonable cost" to the merchant.
MasterCard said it would "monitor and enforce" the new RBA rule, to "stamp out the practice of profiteering".
http://www.theaustralian.com.au/bus...es-get-the-flick/story-e6frg8zx-1226393520724
