The looming credit card surcharge showdown
With outlandish credit card surcharges now banned in Australia, yet no moves have been made by culpable retailers to remove excess charges, it seems a large showdown could be looming.
The new credit card rules that were implemented by RBA on 18 March was welcomed open armed by consumers who have seemingly been paying well and above the costs incurred by retailers for credit card payments, effectively giving business owners another line of income. The new rules were intended to give credit card merchants the ability to restrict surcharges to more reasonable amounts. However, it seems that since the rules have been in place very little has changed.
Since the ban came into place airline companies, who claimed to have never profited from the charges, have been suspected of doing a quick shuffle and renaming their surcharges to 'service fees' or 'processing fees'. Others such as taxi payment provider Cabcharge, who allegedly charge as much as 10 per cent surcharge on a credit card transaction, claim the costs are necessary to provide their mobile payment network. Cabcharge founder Reg Kermode has stated outright that they do not believe the RBA will be able to enforce the rule, meaning their surcharge is not likely to disappear without a fight. According to the Herald Sun, we could be about to witness one of the largest showdowns seen in a long time.
Research by the RBA shows when it comes to credit card surcharging, it's the big players who are the most likely miscreants. Just 23 per cent of small businesses charge customers a surcharge to use credit cards compared to 44 per cent of large retailers. But the RBA has a good record of playing consumer advocate against large corporations, taking on even the big banks, such as the case when interchange fees were dropped, passing on lower banking fees to consumers.
And it's no wonder retailers are not likely to give up without a fight. Australians spent almost $440 billion on credit card and debit cards transactions last year, even a slight percentage change in surcharges would bear a serious amount of money.
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