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The great surcharge price gouge continues

CHOICE says big business continues to flout the RBA's surcharging rules 

18 March 2014

CHOICE says 12 months on from the introduction of rules designed to rein in excessive credit card surcharges, Australia's worst surcharge offenders are continuing to take consumers for a ride.1

New data shows Australians are paying an estimated $800 million in surcharges annually - mostly to airlines.

"March 18 will mark one year since the RBA introduced long-overdue rules designed to limit credit card surcharges to the reasonable cost of the transaction," says CHOICE CEO Alan Kirkland.

"Unfortunately no-one was put in charge of policing or enforcing the rules, leaving the likes of Cabcharge, Qantas, Virgin Australia, Jetstar and Tiger to continue using card fees as a sneaky way of raising additional revenue.

A CHOICE review earlier this year found consumers flying Qantas from Sydney to Melbourne can still pay a staggering 523% more than the average merchant service fee, similar to the 568% they were paying back in March 2013.

"Surcharging should be reduced to a reasonable level, which RBA data shows on average to be less than 1% for merchants processing transactions through Visa and Mastercard."

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.2

Number crunch

Qantas credit card surcharge for a flight from Sydney to Melbourne:
  • March 2013 = 5.5%
  • Dec 2013 = 5%
This represents a mark-up on the average merchant service fee of:
  • March 2013 = 568%
  • Dec 2013 = 523%
Notes:
  • Qantas surcharge was $7.70 in March 2013 and $7 in December 2013
  • Based on a flight Sydney-Melbourne for 19 Dec 2013 booked on 18 Dec 2013 for $138.82.
  • Average merchant service fee for Visa/MasterCard credit cards for March 2013 (0.83%) and September 2013 (0.81%) as published by the RBA.

  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. 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".

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