Big companies charge excessive credit card fees

New research reveals the biggest companies slug customers the hardest.

Costs down, profits up

With excessive credit card surcharging still rampant, the worst offenders have now been revealed: 40% of big merchants with a turnover of over $725 million are imposing card surcharges of 1.5-2% per transaction, even though the vast majority of them only pay merchant service fees (MSF) of 1.5% or lower.

According to East & Partners, big companies not only tend to charge higher fees, but also charge them more often. Over 72% of big companies are adding a surcharge to their transactions – more than double the percentage of small companies doing the same.

Big companies tend to pay smaller MSF than small companies. And only 13% of smaller merchants with a turnover of less than $5 million charge credit card fees of 1.5-2%, even though nearly 90% of them pay MSF of 1.5% and more.

But there has been one benefit from the RBA reforms: the average MSF for all credit cards dropped from 1.62% in 2010 to 0.95% at the end of 2014.

Average surcharges also decreased from 2.6% to 1.6%.

However, in some industries, such as airlines, high surcharges are still the norm.

Time for action

Last month the RBA – just in time for the two-year anniversary of a ban on excessive surcharges – proposed a 'cap' on surcharges posed by merchants.

However, CHOICE thinks it's time to stop proposing and take action. A ban on excessive surcharges can best be enforced by a body that has sufficient regulatory powers, and that can issue significant penalties for non-compliance.

Read more on credit cards.