05.Will the reforms be enforced?
While the RBA will monitor any developments, there’s no regulator enforcing the reforms; instead it’s left to the card schemes themselves.
Visa and MasterCard told us they’re considering a compliance and auditing program if merchants do not follow the reforms. They also indicated they will work closely with the banks, which better understand retailers’ costs.
“Those who don’t correct themselves will be audited, we know who the usual suspects are” says Visa country manager for Australia Vipin Kalra.
“I think the responsible merchants will come into line without us being the angry guys”, adds MasterCard's vice president of strategy and corporate affairs, David Masters.
Visa and MasterCard will target so-called "blended" surcharges, where retailers apply the same surcharge for all card schemes even though costs for American Express and Diners Club are much higher. According to the RBA, 30% of retailers who charge a surcharge for Visa, MasterCard and American Express charge the same surcharge for all three.
Also in the firing line are surcharges applied as a fixed amount instead of calculated as a percentage of the price. For example, Jetstar charges a flat $17 fee per passenger for a $70 return flight from Sydney to Melbourne paid using either Visa or MasterCard. This amounts to a staggering 24% surcharge and a 2670% mark-up on the average MSF.
What else is happening?
Another possible solution may come in the shape of further reforms as the entire payments system in Australia undergoes rapid change. Along with the reforms to rein in excessive credit card surcharges, there are broader reforms at work to shape how we pay for goods and services, what the systems will cost to use, and how much systems will support choice and flexibility.
For example, the RBA recently concluded a Strategic Review of Innovation in the Payments System. One of the most important issues for consumers raised by the review is a call for the payments industry to make real-time payments available to consumers by 2016. This would make it possible for people to near-instantly transfer cleared funds from their bank account to any other person or retailer, eliminating the usual three-to-five-day wait.
One significant benefit of this would be in providing a widely available alternative to using credit cards for online purchases and so being able to avoid paying an over-inflated surcharge.