7 March 2013
Ahead of new rules reining in excessive credit card surcharges from 18 March,1 CHOICE is calling on the worst offenders to stop price-gouging shoppers.
The Reserve Bank’s reforms are a major win for consumers, and follow years of CHOICE campaigning to stop retailers using card fees for revenue-raising.2
“We are looking forward to the end of the era of sky-high surcharges, but we need enforcement action to ensure these outrageous fees don’t live on under other names,” says CHOICE Head of Campaigns Matt Levey.
“Unfortunately, there is no official agency charged with enforcing the new rules, so it will be up to card companies along with consumers to take charge.”
CHOICE says there is a risk that some retailers will try and sneak around the new rules. For example, all three domestic airlines have joined Cabcharge in muddying the waters, calling their surcharges a ‘booking fee’, a ‘booking and service fee’ or a ‘fee for financial services’,” Mr Levey says.
Since CHOICE published a major investigation into surcharges in 2010, card fees have continued to increase, in the case of some airlines, more than doubling:
Jetstar – from $3.50 per flight per passenger to $8.50
Virgin Australia – from $3.50 per flight per passenger to $7.70 per booking per passenger
Tiger – from $7.20 per sector per passenger to $8.50 per sector per passenger
“The Reserve Bank’s changes are welcome, but the proof will be seeing the surcharges closer to the cost of processing transactions, which for MasterCard or Visa is about 0.86%” Mr Levey says.
“For example, Jetstar charges a flat credit card fee of $17 per passenger for a $70 return flight from Sydney to Melbourne paid using Visa or MasterCard.
“That is a staggering 24% surcharge, and a 2670% mark up on the average merchant service fee,” Mr Levey says.
To make sure surcharge reforms work for consumers, CHOICE has today launched ‘Take Charge’, a campaign calling on the biggest offenders in excessive surcharges to change their ways.
The petition at choice.com.au/surchargepain targets Qantas, Jetstar, Virgin Australia, Tiger Airways and also Cabcharge, whose 10% surcharge received a 2012 CHOICE Shonky award.
Read CHOICE’s new investigation on credit card surcharges.
What consumers can do
- Avoid businesses charging excessive surcharges
- Use a payment method that’s free
- Pay cash
- use EFTPOS
- use BPAY or an online transfer
- Complain to the retailer about the excessive surcharge
- Complain to your bank and credit card company about the excessive surcharge
Had enough of excessive surcharges? Head to choice.com.au/surchargepain to sign the petition.
- Under the Reserve Bank’s reforms, surcharges that retailers can charge consumers for paying by credit card will be limited to the “reasonable cost of card acceptance”. On average, this is less than one per cent for Visa and MasterCard and about two per cent for American Express and Diners Club. Responsibility to keep retailers in line will lie with card companies, as no government agency has responsibility for enforcing and monitoring the changes.
- The Reserve Bank announced its intention to review surcharging rules in 2011, following the publication of a joint CHOICE and NSW Fair Trading investigation into surcharging in late 2010. In May 2012, a CHOICE investigation estimated Qantas may be recovering $100 million more in credit card surcharges from consumers than it costs to process these transactions.