Authorities told to crack down on credit card surcharges
Credit card users might finally receive some protection against extortionate charges after authorities were ordered to take action.
For years, consumers have faced steep surcharges when using their credit cards to pay for goods and services, particularly in the travel and hospitality sectors.
Of particular concern are the fees imposed by flight companies, taxi firms, event ticket vendors and hotels, which can charge above $20 if customers wish to pay by credit card.
It has long been argued that these charges far exceed the true cost borne by the vendor for receiving payments by card, which rarely exceeds 2% of the cost of a transaction.
Rules were imposed by the Reserve Bank back in March that were intended to limit credit card surcharges to “reasonable” levels.
The cost to a vendor for processing a Visa or Mastercard payment was estimated to be around 2% of the transaction value, while American Express cards cost slightly more.
But vendors have not changed their stance, with only one airline making a slight reduction to its credit card surcharge. This has led to calls for better enforcement of the RBA’s regulations.
In response, the Government has launched a two-pronged attack on surcharges, ordering the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) to assess surcharges and ensure that they are not unreasonable.
But Matt Levey of consumer group Choice said that action was needed rather than a process of ‘monitoring’ because it was clear that consumers had been losing out.
“We are past the stage where monitoring is useful,” he said. “What we need to see is lower surcharges. People are being ripped off.
“The RBA rules aren’t working and someone needs to enforce them,” he added.
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by Gemma Maddock