Retailers to limit credit card surcharges following new rules

New credit rules adopted by Visa and American Express will restrict retailers from charging customers unreasonable fees for paying with a credit or debit card. These rules follow the Reserve Bank's decision  last year to limit merchant surcharges on credit and scheme debit cards, which came into effect on Monday this week (18 March) and is aimed at protecting consumers from higher than justified levels of surcharging.

According to the RBA, a merchant's surcharge should now be limited to a "reasonable cost of acceptance" - in other words, the fee that is payable to the merchant or retailer's bank, which will still allow retailers to recover their credit or debit card acceptance costs. Currently, consumers are paying just under two per cent for using Visa and MasterCard, paying 2.9 per cent to use American Express and four per cent to use Diner's Club. On average, the actual merchant service fee that retailers are required to pay to their banks is estimated at 0.86 per cent for Visa and MasterCard.

The surcharge to accept card payments in taxis via Cabcharge is 10 per cent and, on many airline transaction fees, can add up to much more.

Visa's new rules now require retailers to limit their surcharging to a "reasonable cost" when accepting payment via a Visa card. Additionally, retailers must let the consumer know at point of sale and on their website about their surcharge rate, and are obliged to refund customers the purchase if they don't wish to pay the surcharge.

"Retailers will need to review their surcharging practices to make sure their surcharges are not excessive and that they are clearly disclosed upfront to customers, both in-store and online," Visa's Country Manager for Australia, Vipin Kalra said.

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