When we do our shopping and hand over our hard earned cash, the shops don’t charge us an extra fee for the ‘hassle’ of banking the money. So why when it comes to the plastic fantastic – our debit and credit cards - which arguably makes it easier than ever for the merchant, do we often get slugged with a surcharge that is way above the cost of the transaction?
Answering that question is easy, it’s an extra little cash grab from the merchant, but solving the problem is a bit harder.
This battle for the consumer has been fought for a while. Back in 2013, the RBA gave new guidelines that meant credit card companies could limit surcharges to an amount that's closer to the real merchant service fees – which is, on average, less than one per cent for Visa and MasterCard and about two per cent for American Express and Diners Club. Unfortunately, these self-imposed industry regulations had no effect and companies continued to increase the surcharge over and above the cost of the transaction.
In response to the issue the Government has moved to ban retail outlets and other businesses from imposing unfair card surcharges. The introduction of the Competition and Consumer Amendment (Payment Surcharges) Bill 2015, which has now passed the Senate, will enforce a ban on excessive card surcharging to take effect this year.
The proposed legislation would limit any credit card surcharge to the reasonable cost of accepting the card by a retailer and allow the consumer watchdog, the Australian Competition and Consumer Commission (ACCC), to be responsible for enforcing the surcharging regulations. If the ACCC forms the view that a merchant has engaged in excessive surcharging, they may issue an infringement notice including a penalty for listed corporations of up to 600 penalty units, currently $108,000, for breaking the rules.
The new law is an important step in further implementing the Federal Government’s response to the Financial System Inquiry and providing greater protection for consumers.