Whenever you pay for something using your credit card, it costs businesses money. Typically, it costs more for stores to accept credit cards than other payment methods like debit or EFTPOS. In 2003, the RBA decided to allow those costs to be passed on to consumers in the form of a surcharge (a reform that CHOICE generally supported). The aim was to provide an incentive for people to use cheaper payment methods and to encourage innovation in payment systems.
Several years on, the scoreboard shows that the fees merchants pay have almost halved, saving billions. That windfall was expected to be passed on to consumers, but this factor is not so easy to prove. A much easier task is to gauge public opinion about surcharging. In short, we hate it.
And why not - surcharges feel like a slap in the face. You agree to a price, go through the motions of a sale and then the bar is raised right at the finish line. It’s worse when you’re buying online because unlike at the cashier, the trusty credit card is often the only easy payment option. That is unless you have the luxury of waiting for money to be transferred all over the place (it’s not often this would happen at your local store).
One negative outcome from the reforms was that surcharges became the cream on top for some retailers, especially online. Recent research by East and Partners shows that online retailers are surcharging up to three times the amount seen at physical stores [PDF], and CHOICE investigations have shown that airlines, telcos, utilities and taxi cabs are the most likely to slog their customers with not-so-upfront added surcharge costs.
However, the tides appear to be turning for those excessively surcharging with the RBA recently announcing a review. CHOICE is delivering a submission [PDF] and calling for changes to the system which put an end to unfair surcharges. This includes recommendations that:
- Any surcharges reflect the direct cost of the transaction, which means no more cream on top for those excessively surcharging.
- Online retailers give a clear indication of the surcharge at the start of the sale. Anywhere that headline prices are indicated, surcharges would also need to be disclosed.
- One surcharge per payment – no adding a surcharge to each item.
We’d also like the RBA to provide clearer information about the amounts consumers are being surcharged, including the potential for a list of the worst offenders. With an estimated 40 per cent of large merchants and 20 per cent of smaller businesses surcharging, we’re expecting the total figure will measure into the billions considering the retail industry turns over around $245 billion a year according to the latest statistics.
We don’t just want the big numbers from the RBA though, CHOICE wants members to continue telling us about the surcharges they are facing both in stores and online. Whether it’s acceptable, excessive or outrageous, we want to hear about it.
Tell us your surcharge story in the comments below, on Facebook or by emailing email@example.com.
We looked at bullying in the workplace and what it's costing us as a country, both financially and emotionally. Here are a couple of the opinions we received:
Angela said “I think sometimes victims of bullying don't realise they're being bullied. High profile court cases and training make people aware so they can identify negative behaviours. If you don't realise it's socially unacceptable, you may not realise that the behaviour is bullying.”
Justin said “We need to break the cycle of bullying, where damaged kids turn into unhappy adults, who struggle to relate to others and may quite likely cause their children to feel threatened and bully other kids in an effort to feel safe and powerful.”