RBA takes aim at card surcharges

[Deleted User]

Lets see if the RBA can fix the mess they are responcible for...

''While there is potentially a large variation in the … costs faced by merchants, justifying significant variation in surcharges, concern has been expressed … that some merchants may be using surcharging as an additional means of generating revenue, rather than simply covering the costs of card acceptance''

Credit card fees | Reserve Bank considers fee cap

THE Reserve Bank will consider capping credit card fees charged by hotels, airlines and taxis amid claims consumers are being hit with excessive charges.
The RBA has launched a review of credit card surcharging, raising concerns that some businesses are using excessive fees to make money rather than to cover the cost of the transaction.
The review marks a return to the landmark credit card reforms pushed through by the RBA last decade, which were designed to make payment costs more transparent while eliminating cross-subsidies.


Read more: http://www.smh.com.au/money/rba-takes-aim-at-card-surcharges-20110608-1ft9a.html#ixzz1OlQurUqj​

 

[awilcockson]

About time ... Of course we all know nothing will come of it.

 

[lovestotravel]

I'll believe any changes when they happen!!!!

Wake me then

 

[kpc]

you guys are so cynical.......



































.....but I suspect you are all correct:evil:

 

[thewinchester]

Sweet, delicious irony.

The same group of bankers who thought deregulating the interchange market allowing introduction of merchant service fees to be passed onto the consumer now thinks it was a bad idea and needs fixing.

I've read the RBA's report, and I intend on making a submission on the topic - specially since the RBA seems to be (once again) giving EFTPOS Payments Australia Ltd (EPAL) a free pass here.

EPAL aren't being considered for their merchant service costs, let alone the what I consider criminal protection they pay in the form of substancial "rebates" they pay to big merchants for them continuing to accept. They're also not tacking the fact that these payments and the changes to interchange have permitted merchants to actively discriminate against and decline acceptance of card subtypes within the scheme.

Yeah, I'm taking aim at Woolworths Limited here - but there's a wider issue that needs to be addressed if EPAL wants to be taken seriously on a level playing field for electronic payments.

 

[fantasy86dj]

It would be really nice if something positive came out of it but the chances......

 

[oz_mark]

I just had a look through the public submissions (RBA: Submissions on Card Surcharging). Haven't found the one from thewinchester yet.

It would be fair to say that just reading the name of the entity making the submission means you can pretty much guess the arguments within each submission!

 

[Mal]

I just had a look through the public submissions (RBA: Submissions on Card Surcharging).

Had a read through some of them. The one from the Accommodation Association of Australia's CEO (Richard Munro) http://www.rba.gov.au/payments-syst...ard-surcharging/accommodation-association.pdf is probably the strangest one that doesn't match reality. Which dilusional world does he live in?

The Association’s members include major international hotel chains, including Accor Hotels, Mirvac Hotels and Resorts, Toga Hospitality, Mantra Group and InterContinental Hotels Group.

...

Tourism accommodation businesses within Australia do not impose excessive surcharges on customers who pay by credit card for goods and services provided by these businesses.

...

The highly competitive nature of the industry means that the imposition of additional costs on consumers – such as credit card surcharges – is a major decision for an accommodation business.

Similarly, the level of such costs is determined only once a number of factors are taken into consideration, notably cost recovery. Therefore, there is a strong element of self-regulation around fees and charges, including credit card surcharges, in Australia’s accommodation industry.

...

On behalf of the industry, the Accommodation Association rejects any suggestions that tourism accommodation businesses are using credit card surcharges purely as a means of raising extra revenue or “profiteering”.

 

[Deleted User]

I just had a look through the public submissions (RBA: Submissions on Card Surcharging). Haven't found the one from thewinchester yet.

It would be fair to say that just reading the name of the entity making the submission means you can pretty much guess the arguments within each submission!

Reading some of those submissions makes me really really angry... :evil:

So many tossers out there

How can a 10% surcharge be acceptable...? Or perhaps I am missing something here....

Moving on, Its natural for Visa to have the position below, and this line has been heavily discussed here on AFF and is something I strongly believe is why surcharging above the merchant fee is wrong, wrong, wrong...

Allowing retailers to surcharge forces consumers to pay for the
substantial benefits that merchants receive from accepting cards, which
include greater pools of customers and increased sales, increased
security of payment, lower physical security costs and faster payment
acceptance and settlement times, while generally shifting more than
100 percent of the cost of electronic payments to consumers, with no
regard to these merchant benefits.
Furthermore, surcharging only one payment method – card payments –
has the net effect of completely muting the true cost of other payment
methods. Considering the widely held industry view that the true cost of
accepting payment methods such as cash and cheque are higher or
considerably higher than electronic payment methods, we feel that
selective surcharging in the manner permitted in Australia is deeply
problematic.
Australians paying with a card and paying a card usage surcharge are
effectively also paying the cost of that business accepting other
payment methods, such as cash, which have been absorbed into the
business running costs and thus already form part of the base price of
the good or service that the card surcharge is added to. This is
inequitable, unfair and amounts to an economy wide disincentive to the
electronification of payments.

 

[albatross710]

Before the RBA introduced the changes I recall the standard merchant rates used to be 4-5%, now we are bouncing around 1%. Good.

Then there is Cabcharge - they need to be brought to account.

 

[Mrmaxwell]

Airlines have become the biggest problem in regards to these cc charges. Charging a standard cc fee for an airfare REGARDLESS OF PURCHASE PRICE is just bonkers. More frustrating when there is no 'free' alternative method of payment offered :evil:

 

[drron]

A bit more-the RBA says changes are to start 1/1/13 and surcharges to be limited to"reasonable" but give no idea what is considered reasonable.
RBA cracks down on credit card charges

 

[burmans]

Yes, this is great news.

As far as the definition of "reasonable" I think most people who have English as their first language would interpret reasonable in this case as meaning that the charges can be justified as reflective of the underlying costs. While I think that many words are somewhat ambiguous the term "reasonable" is one that has been in use in legal terms for a long term and has a well understood meaning with pretty of legal precedent. Companies may well try on the the idea that "we don't understand what reasonable means" line but I suspect their lawyers will be arguing against this approach as not sustainable.

 

[SeatBackForward]

Consultants will be engaged to come up with very sophisticated measures, indices, valuations, projections and historial trending to produce a very complicated calculation that will ultimately say "We are reasonably asking you to give us more"..A bit like how executive renumeration has become "fully disclosed"

 

[eastwest101]

Consultants will be engaged to come up with very sophisticated measures, indices, valuations, projections and historial trending to produce a very complicated calculation that will ultimately say "We are reasonably asking you to give us more"..A bit like how executive renumeration has become "fully disclosed"

Cynical but true.....

I would have thought the growth of online booking engines/sites without cc surcharges at all (or reasonable cc surcharges) would have eventually sorted this out, as consumers became more and more aware of the benefits of shopping online and around in different juristictions I think the hotels and airlines would eventually realise that this potential revenue stream just won't be available to them forever.

Similar to the music industry's fight against digital music starting in the 1990's - a futile fight bound to end in tears. Its a shame that the RBA coughed it up/enabled them so much though.

 

[SeatBackForward]

Cynical but true.....

I would have thought the growth of online booking engines/sites without cc surcharges at all (or reasonable cc surcharges) would have eventually sorted this out, as consumers became more and more aware of the benefits of shopping online and around in different juristictions I think the hotels and airlines would eventually realise that this potential revenue stream just won't be available to them forever.

Similar to the music industry's fight against digital music starting in the 1990's - a futile fight bound to end in tears. Its a shame that the RBA coughed it up/enabled them so much though.

Well there is always the option of offering to pay using cash, I have jars full of 5c and 10c coins. I'm sure that realistically, merchants would prefer the card payment over cash.

 

[JohnK]

It is good to view these threads 12 months later. Still no sign of credit card surcharges ending....

 

[markis10]

Sweet, delicious irony.

The same group of bankers who thought deregulating the interchange market allowing introduction of merchant service fees to be passed onto the consumer now thinks it was a bad idea and needs fixing.

I've read the RBA's report, and I intend on making a submission on the topic - specially since the RBA seems to be (once again) giving EFTPOS Payments Australia Ltd (EPAL) a free pass here.

EPAL aren't being considered for their merchant service costs, let alone the what I consider criminal protection they pay in the form of substancial "rebates" they pay to big merchants for them continuing to accept. They're also not tacking the fact that these payments and the changes to interchange have permitted merchants to actively discriminate against and decline acceptance of card subtypes within the scheme.

Yeah, I'm taking aim at Woolworths Limited here - but there's a wider issue that needs to be addressed if EPAL wants to be taken seriously on a level playing field for electronic payments.

WOW have reversed their stance on debit cards, you can now once again use the credit button again.

 

[pauly7]

I think the hotels and airlines would eventually realise that this potential revenue stream just won't be available to them forever..

Yup but takes someone to blink first and at the moment Virgin, Tiger, Qantas et al are more than happy to hold hands and collectively rip people off.

 

[whatmeworry]

There is no way any airline in Australia will give up this revenue stream and they will not change till the rules are changed.