Festive season to cost Aussies $650 million in credit card surcharges
Aussies are tipped to spend $96 billion over the Christmas period but are being warned that the deregulation of bank and merchant fees could cost them $650 million as a whole.
"At a time when Australian banks are enjoying record-breaking profits, it is unjustifiable that cost efficiencies haven’t been passed into small businesses and their customers," wrote Payments CEO of the EFTPOS Institution Tyro, Jost Stollmann, in a submission to the RBA.
The Reserve Bank of Australia Payments System Board will meet tomorrow to discuss the direction of its interchange fee regulation.
Unlike the European Union where there’s a cap on merchant surcharges at 0.3%, Australian credit card users are at the mercy of what the banks and merchants decide to pass on to customers.
"Today, we call on the PSB to draw a line in the sand and eliminate interchange fees by regulating for the future," Stollmann said.
According to the Mastercard website, an “intercharge fee” is “a fee paid between the merchant’s bank and the cardholder’s bank that serves to balance costs in the payments system”. The merchant decides whether to charge the cardholder the fee, or foot the bill. In small to medium-sized businesses, most customers could be charged extra for plastic purchases.
But if intercharge fees are regulated or lowered, it could end up saving the consumer $650 million in surcharges this Christmas period. For instance, 5 million Australians are Visa Premium cardholders, and Visa’s current intercharge fee is at a staggering 2.200%. This means cardholders could be in for a shock at the counter.
Stollmann urged the RBA to take action especially as now is the most profitable time of the year for retailers.
"Consumers would enjoy relief from rising cost of living pressures, while retailers struggling in an increasingly competitive market would become more profitable and competitive," Stollmann said.
Do you think your credit card provider is charging you too much each time you shop? Take a look at our credit card comparison section to find a great deal.