Australians Are Still Being Rorted By Credit Card Surcharge Fees

A CHOICE investigation has found that many Australian companies are continuing to ignore Reserve Bank of Australia (RBA) rules designed to limit credit card surcharge fees. Not surprisingly, taxis and airlines were found to be among the worst offenders.

Credit card picture from Shutterstock

At the beginning of the year, RBA introduced new regulations to restrict businesses from charging excessive surcharges for credit card payments. As we noted at the time, the rules don’t actually stop merchants from charging for the use of credit cards, however. It's basically up to the credit card provider to limit charges to “the reasonable costs of card acceptance”.

According to a new CHOICE survey, plenty of customers are still being slugged by excessive credit card surcharge fees with taxi and airline services flagrantly disregarding the new rules. Around half of the 1045 Australians polled said they had been required to pay a surcharge in the past three months and were not offered an alternative, surcharge-free payment method by the merchant.

"Excessive surcharges can be a real sting in the tail, turning what looks like a bargain into something more expensive, especially when so many consumers say they are not being offered another option,” CHOICE CEO Alan Kirkland said in a statement.

“It’s now 72 days since the [RBA] rules came into effect and in this time, the worst excessive surcharging offenders have continued charging Australians millions more in surcharges than it costs to process these transactions.”

Cabcharge, Qantas, Virgin Australia, Jetstar and Tiger were all highlighted in the report as some of the biggest culprits, with surcharge fees sometimes exceeding 17 per cent of the total cost.

“For a family with two kids flying from Brisbane to Sydney return with Tiger, $49.95 per flight might look like a cheap ticket, but when you add $68 in surcharges, that’s a staggering 17% of the fare’s price,” Kirkland said.

Brisbane to Sydney flights from Qantas, Virgin Australia and Jetstar accrued a surcharge of 4.3 per cent, 7.9 per cent and 4.2 per cent, respectively.

“We urgently need strong enforcement and policing of the surcharging rules, beyond what Visa and MasterCard can bring to bear through their commercial dealings,” Kirkland concluded.

In a bid to combat excessive credit card surcharges, CHOICE has set up a website where customers can name and shame companies that partake in this shoddy practice. If you've been slugged with an unreasonably credit card fee, head to Choice's Take Charge page and leave a comment.

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Comments

    Cathcharge's 10% and the airlines fees are outrageous. I'd love to see how many customers actually use a different methods to credit when purchasing flights online.

    On another note, cinemas booking fee for purchasing online is ridiculous.

      With Jetstar I always do a bank transfer, and with Virgin I always use Poli. There's no way I'm paying extra credit card charges.

      As a side note, when I was living in the UK I believe there was a law that said there had to be a 'cash' payment option. Obviously with online transactions cash was not possible, so they had to offer at least one surcharge free option. What the airlines did was find the most obscure type of debit card product that was offered by the smallest amount of banks, and offer that as the free option.

      If the government does try to legislate something, I can see the same thing happening here.

    Are there any penalties for ignoring this RBA rule? If not, why would you change to make a fairer deal for consumers? Especially when consumers are use to being held over a barrel.

    While we're all being rorted, the sad fact is that they do it across the board irregardless of the card provider. What's more aggravating is stores like JB HiFi who add in the credit card surcharge as a line item when you use an American Express card. Why the difference? I know they're cheap, but if their sales and profit earnings reports are anything to look at, they could easily absorb the cost into their overall cost of doing business.

    (Using JB as an example, but its happened elsewhere too - doesn't make it less annoying).

      There are various reasons why the items are separate.
      1, so you know what you're paying for (it was $50, why is it now $51?).
      2, It makes the retailer look cheaper, because that extra credit card fee "is not the retailer ripping you off", it's the bank or other financial institute.

      Also American Express cards charge differently to Visa/Mastercard. Visa/Mastercard fees are paid by the retailer whereas American Express usually charges the customer for the privilege of using their card. Some retailers partially cover Amex fees under their own expenses. While some institutes like Banks, that provide the Amex card through themselves, do deals with AmEx for reduced fees, which sometimes allows for AmEx cards to be "transaction fee" free for customers, because the bank is covering the fees. I believe Amex also charges higher rates/fees than Visa/MC

    Cabcharge are eventually halving their fee to 5% in Victoria (Not by choice). Assuming it does happen, that's progress (even if it is only because the Govt is forcing it).

    Ticketek/Ticketmaster 'handling' and 'delivery' fees are even more nonsensical.

    The most important part of this story has been left out. The Commonwealth Consumer Affairs Advisory Council is currently running a Consumer Survey.
    Go here: http://ccaac.gov.au/consumer-survey/

    One thing I don't understand: How some surcharges can apply on a "per person" basis, rather than a "per transaction" basis. If you're only taking 1 payment how can the "reasonable cost of acceptance" change simply because I'm buying more of the same product? For just 1 example, Qantas card fee is "Fee - per passenger per ticket" - so more passengers = more fees, even though only 1 payment is being taken.

      Ah, airlines surcharges. This is interesting case as it is on the border of being illegal. In order to be legal they need to provide alternative payment that does not attract surcharge. They do that by accepting bank transfer, but there is a little note saying that seats are not guaranteed until payment is received. Effectively saying you need to pay by credit card and pay the surcharge.

    July 27 2013 Arrived back in Australia today at Melbourne International airport. Sign at F1RST duty free checkout says 1.5% surcharge on Visa, Mastercard and Travel cards. This is still a ripoff. Luckily We had enough cash. so they did not win here.

      This is reasonable charge. Commonwealth did offering last year for 1.5% flat fee plus monthly fee. Generally between 1 to 3% is the reasonable cost.

    As a small business owner, I am trying to establish a fair way to incorporate these costs into my prices.
    Visa costs are around 1% and AMEX around 2.5% of every transaction. My business is online only, so I already operate on razor thing margins. It is AMEX and VISA that are making all the profit here. Not the small businesses.
    I am only charging the exact amount charged by these corporations, nothing more.

      Just do what I did when running a small business, claim your costs back at tax time and don't charge a fee! It's for that reason I feel that retailer credit card surcharges are just a way to boost the cost of an item or service. They are not justified.

        This depends on the margin. Certain businesses like newsagents are selling items that are commission based and have no control over the pricing (and hence margin). Worst of all, usually the commission is somewhere between 2-6%. Imagine if we get paid by our bosses through bank transfers and the banks charge up to 50% transaction fee (as card fees usually is about 1.5%, on 3% margin items this would be 50% of the profit) on these.......please pay me cash boss.

    Was at the Caboolture SHow Grounds earlier in the week and asked to pay a $2.00 surcharge on a $25.00 amount. That amounts to an 8% surcharge!
    They obviously want theirs to remain a cash only business

    Important information on these extortionate fees.

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