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- Jul 27, 2015
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There's an interesting article in the AFR today about some crazy credit card surcharging practices.
Live Payments, which leases payment terminals to small businesses, is incentivizing those businesses to cop a very high 2.6% processing fee in exchange for earning 1 Qantas Point per $1 processed. That fee can be passed on in full to customers under current regulations, which means the business can earn Qantas Points for free, essentially - and some are doing just that.
www.afr.com
The article mentions the RBA has brought forward its regular review of payment system regulations, with a discussion paper likely being released this week.
Other than surcharges, the RBA may look at interchange fees (which are the fees card issuers charge merchants; these help pay for the points cardholders earn).
Last time (in 2021) the RBA said:
"The Board's long-held view is that interchange fees should generally be as low as possible, especially in mature payments systems. At present, the Board does not see a strong case for significant reforms to the interchange regulations. The current interchange settings have been in effect for only 4 years and appear to be working well. In particular, the Board does not currently see a strong public policy case for lowering the weighted-average benchmarks or the credit card cap.
Given the massive increase in card payments in Australia, I suspect we'll see the RBA drive down interchange fees even further over time, meaning we'll earn fewer points on credit card spend and see even lower card sign-up offers.
Will the RBA take a step in that direction this year? We shall see!
Live Payments, which leases payment terminals to small businesses, is incentivizing those businesses to cop a very high 2.6% processing fee in exchange for earning 1 Qantas Point per $1 processed. That fee can be passed on in full to customers under current regulations, which means the business can earn Qantas Points for free, essentially - and some are doing just that.
Businesses pass on higher fees to customers for Qantas points
Consumers are being hit with far higher debit and credit card surcharges than needed, while small businesses rack up frequent flyer points.
The article mentions the RBA has brought forward its regular review of payment system regulations, with a discussion paper likely being released this week.
Other than surcharges, the RBA may look at interchange fees (which are the fees card issuers charge merchants; these help pay for the points cardholders earn).
Last time (in 2021) the RBA said:
"The Board's long-held view is that interchange fees should generally be as low as possible, especially in mature payments systems. At present, the Board does not see a strong case for significant reforms to the interchange regulations. The current interchange settings have been in effect for only 4 years and appear to be working well. In particular, the Board does not currently see a strong public policy case for lowering the weighted-average benchmarks or the credit card cap.
Given the massive increase in card payments in Australia, I suspect we'll see the RBA drive down interchange fees even further over time, meaning we'll earn fewer points on credit card spend and see even lower card sign-up offers.
Will the RBA take a step in that direction this year? We shall see!
