The Reserve Bank of Australia’s proposed ban on credit card surcharges could worsen inflation and force up prices for all consumers, the Australian Travel Industry Association (ATIA) warned.

The RBA announced earlier this year it was looking to ban surcharges on eftpos, Mastercard and Visa cards, as well as lower the cap on interchange fees paid by businesses. 

Businesses have expressed concern about absorbing the payment costs, which are roughly $1.2 billion each year, while banks also warned the ban would force them to increase credit card interest rates and fees.

In its latest announcement, the ATIA has also shared a fresh perspective on the move.

According to the organisation, the travel industry faces a unique set of circumstances when it comes to payments, with any change having widespread impacts on both businesses and consumers.

“International travel transactions average $6400 to $10,000 and are often paid 70-100 days in advance, exposing travel businesses to unique risks.  

“Given that the cost of a 1.3 per cent credit card surcharge is $83 on $6400, it is unsurprising that 95 per cent of ATIA members – Australia’s accredited travel agents, tour operators, consolidators and wholesalers – rely on surcharges to recover card payment costs where customers choose to pay by card,” it said.

ATIA estimates that 44 per cent of travel transactions are made via credit cards, while debit cards account for around 10 per cent.

A complete surcharge ban would likely force a shift in costs to higher base prices or increase service fees for all customers, regardless of how they choose to pay, the organisation said.

The group suggests the RBA, at the very least, to restrict any ban to debit cards and maintain the surcharge on credit cards.

“Travel industry operators already give consumers the option to avoid credit card surcharges if they pay by cash or eftpos,” said ATIA CEO Dean Long. “If credit card surcharging is banned, the cost will have to be passed on to everyone, not just people who pay by credit.”

“This seems unfair and will be reflected in higher overall prices and this will stoke inflation. This comes at a time when prices for the Travel Industry have already been under pressure,” he added.