Credit card surcharge cap lobbied
(22 July 2011 – Australia) Commonwealth Bank of Australia (CBA) are lobbying the Reserve Bank (RBA) to scrap a proposed cap on credit card surcharges.
The Australian reported yesterday that the CBA would support an alternative plan that meant merchants could only charge customers for the actual cost of carrying out a transaction, based on individual credit card schemes.
This is one of the RBA’s main aims in its reform of the payment system, and the proposed cap is intended to stop merchants from charging customers a fee above the true cost.
The RBA also aims to cut the cost of credit-card transactions, increase the transparency of the payments system and save customers millions of dollars each year.
In the submission, the CBA's general manager of reputation, Stuart Woodward, said aligning surcharges to merchant fees would be of greater benefit to credit card customers.
Mr Woodward said a cap would benefit major companies more because the cost of an individual credit card transaction was relatively lower for them than smaller merchants.
'We believe that (the RBA) option will encourage merchants to surcharge up to the capped level, which may be well above their cost of acceptance,' he said.
The RBA has argued that merchants are using the surcharge to build profits, rather than cover the cost of credit card transactions.
Westpac was due to lodge a submission with the RBA last night, while NAB and ANZ said they had not prepared one.
This is one of the RBA’s main aims in its reform of the payment system, and the proposed cap is intended to stop merchants from charging customers a fee above the true cost.
The RBA also aims to cut the cost of credit-card transactions, increase the transparency of the payments system and save customers millions of dollars each year.
In the submission, the CBA's general manager of reputation, Stuart Woodward, said aligning surcharges to merchant fees would be of greater benefit to credit card customers.
Mr Woodward said a cap would benefit major companies more because the cost of an individual credit card transaction was relatively lower for them than smaller merchants.
'We believe that (the RBA) option will encourage merchants to surcharge up to the capped level, which may be well above their cost of acceptance,' he said.
The RBA has argued that merchants are using the surcharge to build profits, rather than cover the cost of credit card transactions.
Westpac was due to lodge a submission with the RBA last night, while NAB and ANZ said they had not prepared one.
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