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Fixed-dollar surcharges

CHOICE welcomes fixed-dollar surcharge ban and calls for consumers to dob in corporate profiteers

26 May 2016

Consumer group CHOICE has welcomed the RBA's decision to ban fixed-dollar surcharges from 1 September after nearly a decade of campaigning against the rip-off that took off with airlines and ticketing companies. 
 
The RBA's decision follows the Competition and Consumer Amendment (Payment Surcharges) Bill 2015 that was passed by the Senate in February 2016 giving the Australian Competition and Consumer Commission (ACCC) the power to crack down on companies charging excessive surcharges for card payments.
 
"The RBA's decision means businesses with revenue in excess of $25 million or 50 or more employees such as airlines and ticketing companies will have until September to end their flat fee frenzy," says CHOICE spokesperson Tom Godfrey.
 
"Under the new rules, surcharges will be limited to the direct costs of providing the payment method for you. This will simply include bank fees and terminal costs, not a hefty profit margin.
 
"For years some of Australia's biggest businesses have been slugging consumers with excessive flat fees up to 1000% above the cost of processing payments.
 
"Even though the writing has been on the wall since February, the airlines are still punishing consumers with sky-high fixed surcharges that don't reflect the costs of accepting cards.
 
"We think they should have already acted in their customers' interests and reduced their surcharges. They know they are in the wrong," Mr Godfrey says.
 
CHOICE analysed airline surcharges again this week and found excessive booking fees that don't reflect the actual cost of processing a credit card. The consumer group found that the Qantas $7 card surcharge on a cheap flight is 348% higher than it should be, and Jetstar's $8.50 surcharge landed a whopping 1182% mark-up.[1]
 
"It is now time for consumers to call these corporate profiteers to account - if you make a purchase and the business slugs you with an excessive flat fee surcharge we want you to report it," Mr Godfrey says.
 
From today consumers can report a sky-high surcharge at choice.com.au/shonkysurcharges
 
"The great news for consumers is that the ACCC has recently been given the power to investigate whether a surcharge is unfair and issue infringement notices of up to $108,000 for companies that don't play by the rules," says Mr Godfrey.
 
"With the ACCC's new powers and the RBA standards in place, it couldn't be clearer that the age of sky-high surcharging is over."
 
Airlines the worst offenders:
A CHOICE investigation shows that airlines are some of the worst offenders, vastly marking up the cost of credit card booking fees, in some cases by over 1000%:

Airline Ticket cost[2] Card payment fee Likely average fee
incurred by merchant[3]
Percentage mark-up
QANTAS $200 $7 $1.54 354.55%
Virgin $135 $7.70 $1.19 545.16%
Jetstar $85 $8.50 $0.65 1198.70%
Tiger $95 $8.50 $0.73 1062.00%td>

More information about the standards is available at rba.gov.au
 
The standards will be mandatory for big businesses from 01 September 2016 and for small businesses from 01 September 2017.
 
[1] choice.com.au/money/credit-cards-and-loans/credit-cards/articles/credit-card-surcharge-crackdown
[2] Flights selected were SYD to MEL morning commuter flight on Monday 29 February. Cheapest flight before 9am selected. Flights costs and booking costs reviewed between 11:00 and 11:15 on Tuesday 02 February 2016.
[3] Percentage mark-up calculated on the RBA March 2016 average merchant service fee and other merchant fees for MasterCard and VISA of 0.77%.

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