Some participants in our diary survey said disclosure was inadequate. Respondents reported that:
- in more than 10% of 163 recorded surcharging instances, they did not recall being notified at all
- of those who were notified, one in four felt the notification was not prominent enough
- just under one in five of the respondents who had been notified felt the timing of notification was inadequate. Sometimes this was because disclosure was made after the transaction had gone through.
One participant only noticed that Origin Gas charges a 0.6% fee after she had paid – “there’s a small notation on the bill about the surcharge; the fee is added to the next bill”.
Similar problems can arise when disclosure is verbal rather than in writing. One diary respondent found that a 3.5% fee for Amex at a hardware store was disclosed verbally and only as the transaction was being processed.
Around the airlines
In 2009, CHOICE awarded Qantas a Shonky for its $7.70/$25 per booking per passenger credit card surcharges, paid on domestic and international flights respectively. Assuming Qantas pays far below the average merchant service fees of 0.9% (MasterCard and Visa) and 1.9% (Amex), it’s probably a nice little earner.
The surcharge on small-value bookings is exactly the same as for large-value bookings. And because all cardholders pay the same blended surcharge, those with standard Visa and MasterCard subsidise the cost of Amex cards and the benefits of those with loyalty programs. Qantas commented that it “ strongly rejects any suggestion that its card payment fees are somehow shonky or that Qantas is gaining a windfall from them.” The airline said all merchants were allowed to decide their own surcharges under the 2002 Reserve Bank changes. “We believe our approach is straightforward, transparent and ensures consumers are always aware of what the additional cost will be. Our fees are fully disclosed and customers can use alternative means of payment.” The spokesman conceded, “We do not claim our card payment fees directly reflect the specific amount that a financial institution charges in respect of any particular transaction.”
Virgin Blue charges a flat $3.50 per passenger, per sector, for domestic travel, and $6 per passenger, per sector, for international; Tiger charges $7.20 per passenger and sector for domestic travel, while Jetstar charges $3.50 per domestic and $5 per international flight. Rex is the only airline surveyed that applies percentage fees, which vary depending on the card.
Both Virgin and Jetstar allow consumers to use a new internet payment system called POLi to avoid paying a surcharge. However, consumer awareness and use of the systems is very low and some survey respondents were critical.