8 November 2013
CHOICE is calling for action on sky-high credit card surcharges following a much-anticipated report from the Commonwealth Consumer Affairs Advisory Council (CCAAC).
The consumer group has welcomed the Federal Government’s immediate referral of the report’s findings to ASIC and the ACCC, but says there is no need to wait for further monitoring from the Reserve Bank when the problem is obvious.1
“We are calling on regulators to enforce surcharge limits, and bring an end to the use of credit card fees as an additional profit centre for some businesses,” says CHOICE Chief Executive Alan Kirkland.
“CHOICE set a ticking clock against the worst surcharging offenders when the RBA changed the rules to reign in credit card surcharges on 18 March this year,” says CHOICE Chief Executive Alan Kirkland.
“For 235 days, these businesses have thumbed their noses at the RBA, ignored the government, and continued slugging Australians with outrageous credit card fees, well in excess of what it costs to process these transactions,” says Mr Kirkland.
CHOICE says the CCAAC study presents important findings about the need for more transparency around surcharges, and for more practical fee-free payment options.2
The committee has also reached a welcome conclusion that there is a role for public enforcement where the rules of card schemes are insufficient to protect consumers from harmful surcharges and fees.3
CHOICE says it is clear that the card schemes have insufficient ability to reduce credit card surcharges given nothing has changed since March 18.
“This is the point at which regulators need to step in and say we don’t need more monitoring or studies, let’s stop Australians getting price-gouged for choosing to pay with their cards,” says Mr Kirkland.
1. Under the Reserve Bank’s reforms, surcharges that retailers can charge consumers for paying by credit card are supposed to be limited to the “reasonable cost of card acceptance”. On average, the Merchant Service Fee charged by banks to retailers for each transaction 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 currently lies with card companies. No government agency has responsibility for enforcing these rules.
2. Commonwealth Consumer Affairs Advisory Council, ‘Credit card surcharges and non-transparent transaction fees: a study’, July 2013, p. vii
3. Ibid, p. 41