Credit card surcharges in the spotlight

From March 18, the Reserve Bank of Australia is giving credit card companies the power to force retailers to limit what they can charge consumers to use credit and debit cards.

If they proceed, retailers will no longer be able to charge up to four per cent for a credit card transaction, and will be restricted to as little as one per cent.

The ramifications could be huge, with Australians spending a staggering $440 billion on credit, debit and charge card transactions last year.

This includes $208 billion on Visa and MasterCard credit cards, $130 billion on Eftpos cards, $54 billion on American Express and Diners Club charge cards and $49 billion on Visa and MasterCard debit cards.

Tyro Payments CEO, Jost Stollmann, said the changes will benefit consumers, but the major banks have a responsibility to help bring down costs for retailers.

“Often consumers are charged nothing to use their credit cards, but in many cases they do have to pay a fee, for petrol, clothing and food,” said Stollmann.

“The major banks impose unnecessary costs on small retailers, who then pass the costs onto consumers.

“Banks are making record profits, while retailers are struggling to survive. Banks need to lower their ‘interbank’ fees, which will give retailers the capacity to lower credit card fees for consumers.”

American Express and Diners Club card transactions attract surcharges of three to four per cent, while 36 per cent of all retailers levy a surcharge on credit card purchases.

The Reserve Bank of Australia first allowed credit card surcharging in 2003. In December 2010, the average surcharge paid by consumers for Diners Club was four per cent; American Express, 2.9 per cent; Visa, 1.9 per cent; and MasterCard 1.8 per cent.

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