NSW and Victoria set to crack down on fees
8 April 2014
CHOICE has welcomed the news that the NSW government will follow Victoria's lead and slash excessive taxi surcharges, and is calling for other state and territory governments to follow suit.
The move follows research released last month by MasterCard showing Australians are paying an estimated $800 million in surcharges annually as industry continues to ignore the Reserve Bank rules designed to limit excessive surcharging.1
"We congratulate the NSW government on taking this step to drive down excessive surcharges on taxi fares and we call upon other state and territory governments to do the same," says CHOICE CEO Alan Kirkland.
"Surcharges should be reduced to the reasonable cost of processing cards, which RBA data shows on average to be less than 1% for merchants processing transactions through Visa and MasterCard."
"Hopefully this will mean one less industry taking advantage of consumers and flouting the RBA's rules, which unfortunately have no regulator enforcing them."
"In the 12 months since they came into place, the surcharging limits have been ignored by all of the worst surcharging offenders, in particular the nation's airlines," Mr Kirkland says.
In 2012, CHOICE awarded Cabcharge a Shonky for its 10% credit card fee, which the company bizarrely claimed was not a surcharge but "fees on financial services rather than as a surcharge on the underlying transaction."2
The NSW government's decision to act on excessive taxi surcharges comes after the Victorian Taxi Services Commission began enforcing a maximum 5% surcharge on February 1 this year.
A survey commissioned by CHOICE last year found that close to half of Australians who reported paying a credit card surcharge say they were not offered or made aware of an alternative, surcharge-free payment method.3
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 1% for Visa and MasterCard and about 2% 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. Read more about Cabcharge's Shonky.
3. CHOICE commissioned a nationally representative survey of 1,045 online Australians between 23 and 26 May 2013. The survey questions were part of a weekly omnibus conducted by Essential Research. When the 79% of respondents who reported using a credit card in the last 3 months were asked "At the time you last paid a credit card surcharge, were you offered or made aware of an alternative payment method that did not attract a surcharge?", 44% answered "No".