Merchants ripping off customers with surcharges
(10 October 2011 – Australia) Credit card giants MasterCard and Visa told a Reserve Bank of Australia (RBA) inquiry that retailer’s credit surcharges are excessive.
Visa has told the RBA that credit card surcharges are excessive and are not supposed to be "a source of extra profit for merchants'.
MasterCard has weighed in on the debate advising the RBA that merchants are surcharging well above the cost of accepting card payments, and are "using the excess surcharges to subsidise their business operations".
At a board meeting next month, the RBA is expected to discuss placing a cap on the credit card surcharge that merchants can charge customers according to a report by The Australian.
According to RBA data, surcharge levels rose by 100 percent between 2007 and 2010, in 2007 the average surcharge for general-purpose credit cards was roughly the same as the Merchant Service Fee (MSF).
In 2010, surcharge levels were about 1 percent higher than the MSF.
Visa has called for a ban on surcharging, stating: "The cost of accepting a payment card is no different from other costs such as cash handling or electricity, and like these costs should be absorbed into the overall costs of the business."
MasterCard said that the ability for retailers to surcharge for payment methods such as credit cards, but not for other methods such as cash or cheques, is "a failure of common sense".
MasterCard has weighed in on the debate advising the RBA that merchants are surcharging well above the cost of accepting card payments, and are "using the excess surcharges to subsidise their business operations".
At a board meeting next month, the RBA is expected to discuss placing a cap on the credit card surcharge that merchants can charge customers according to a report by The Australian.
According to RBA data, surcharge levels rose by 100 percent between 2007 and 2010, in 2007 the average surcharge for general-purpose credit cards was roughly the same as the Merchant Service Fee (MSF).
In 2010, surcharge levels were about 1 percent higher than the MSF.
Visa has called for a ban on surcharging, stating: "The cost of accepting a payment card is no different from other costs such as cash handling or electricity, and like these costs should be absorbed into the overall costs of the business."
MasterCard said that the ability for retailers to surcharge for payment methods such as credit cards, but not for other methods such as cash or cheques, is "a failure of common sense".
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