Finance Your Budget Credit card fees to be cut as ACCC intervenes

Credit card fees to be cut as ACCC intervenes

Card charges.
A cup of coffee could be cheaper on card now. Photo: Getty
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If you’re buying with a credit card, the days of traders charging you excessive fees are over. From Friday, most of us can expect to pay no more than 1 to 1.5 per cent.

Up to now, fees of 50c were fairly common on transactions under $10 in most cafes, but Australians will now pay approximately 1 per cent of a $4 coffee, or 4c.

All Australian businesses have now been banned from slugging customers excessive surcharges for using EFTPOS and credit cards to pay for purchases under changes introduced on September 1.

The Australian Competition and Consumer Commission (ACCC) introduced the second stage of the ban after the introduction of a similar measure for big business.

The changes will also standardise the amounts businesses charge for a variety of ways to pay. That means businesses previously charging between 1 and 2.5 per cent for different cards must now charge the lowest rate or less.

ACCC Deputy Chair Michael Schaper said the change was brought in after more than 5000 complaints into excessive credit card surcharges. 

“The good news for consumers is that businesses can now only surcharge what it actually costs them to process card payments, including bank fees and terminal costs,” he said.  

“In terms of the coffee cup, businesses may make a decision about how to manage this.”

Businesses which charge a flat fee on card use now need to be careful that the fee does not exceed the cost of processing the card transaction.

Australians who feel they’re being overcharged could do a quick check of whether how much they’re being slugged is equal to or less than 2 per cent. Australians are increasingly paying by card, with almost eight billion credit card transactions here in the last year alone.

Dr Schaper recommended consumers get in touch with the ACCC if they feel they’re being charged too much for paying by card.

“Our message to business is that you are not allowed to add on any of your own internal costs when calculating what surcharge you will charge customers,” he said.

“The only costs businesses can include are external costs charged to you by your financial provider.”

Some payments not covered by new rules

However, some payments will not be covered by the change, including card payments in taxis, American Express cards issued directly by American Express, BPAY, PayPal, Diners Club cards and cheques.

The changes have been welcomed by consumer rights group, CHOICE. 

“When a consumer pays for their $4 coffee, they shouldn’t be hit with an extra 50 cent charge just for using their card.”

Russel Zimmerman, Executive Chairman of the Australian Retailers Association, said although he welcomed the changes he had concerns about how well the message had been spread.

“I don’t think it’s well understood,” he said. “I think there are small businesses that probably aren’t compliant.”

He said although the ACCC had published a media release there had not been enough coverage to prepare businesses.

And although some businesses may not be aware of Friday’s changes the ACCC said it’s no excuse.

“Businesses should have received merchant statements from their financial institutions in July setting out their cost of acceptance for each payment method,” the regulator said. 

“CHOICE is urging business owners to issue a fair surcharge. Loyal customers will walk away if they are treated unfairly.”

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