E-mail Submissions on Card Surcharging

Submitted by: Martin Brady
Date: 10 June 2011

If paying by credit card is provided as the only common payment option – next to cash, bank transfer or other commonly available direct funds transfer – then the merchant should be required to include the surcharge in the advertised/listed selling price. This will allow the consumer the ability to compare the total price of the transaction to other alternatives, or choose an alternative payment method when these are available.

Martin Brady

Submitted by: Lindsay Burke
Date: 14 June 2011

I would like to submit the following to your inquiry into the above topic.

I consider the practice of using a ‘percentage’ surcharge as very unethical. Consider the example given below.

If I purchase an item for an amount of $100.00 and the surcharge is 1%, I pay $1.00 for the single card transaction.

If however, I purchased 10 of these items (at the same time) for a total cost of $1000.00 and again if the surcharge is 1%, I pay $10.00 for the same single transaction.

Why should this second transaction cost $9.00 more? It is still only a single transaction.

I realize the use of the ‘percentage charges’ for the credit/debit card surcharge comes from the credit card provider through the banks and then on to the merchant.

But the higher monetary value on the second transaction given above is to me, a rip-off.

Any surcharge should be in dollar terms only and NOT in percentage terms. ie say $0.50 for an accumulated all up cost of $0.38 for the total transaction for the three parties involved. It should not be too hard for these businesses to work out a dollar value per transaction.

I would not oppose a reasonable profit to be taken by any of the three businesses above (credit card provider, banks or the merchant) as long as it was not excessive.


Lindsay Burke

Submitted by: Rennie Cacciola
Date: 16 August 2011

To whom it may concern,

I am most disconcerted by the surcharges applied by retailers, telecommunications companies and government agencies such as councils.

This is making us pay for the privilege of paying bills over the phone or internet. This is robbery as these entities have reduced the staff who take in payments.
It is highway robbery. This is especially the case with local governments.

If a surcharge is levied, the use of a percentage is well over the cost of the transaction. Therefore, if a surcharge must be levied, then it should be fixed at cost of the transaction which should be assessed by an independent body, not by the bank or financial entity who collect the surcharge. I would estimate the cost to be no more than 50c per transaction, if that.



Mr Rennie Cacciola

Submitted by: Raymond J Goddard
Date: 9 June 2011

It is my understanding that businesses are able to negotiate the level of fees they will be charged by their banking institutions for credit card use.

My local, one man, computer repair shop has negotiated with his bank a fee of 0.7% for credit card transactions. He has chosen to absorb that in his pricing structure.

My local, again a one man operation, motor mechanic is charged a merchant fee of 1%. This he has also negotiated and includes in his pricing structure.

The two main supermarkets here in Victoria (Coles, Woolworths/Safeway) do not charge a surcharge fee for credit card use. I would wager London to a solitary brick that their merchants' fee, as charged by their bankers, would be very close to 0% if not, only a few basis points more.

I cannot accept for one moment that our telcos and our airlines, with their respective volumes of business, have not also negotiated 0% or very close to it merchant fees for credit card use.  The reality of course is, the banks would be falling over themselves just to have their business – with a zero merchants' fee.

It galls and infuriates me to the utmost that these recalcitrant organisations have the temerity to charge 1%, 2%, 3% and as much as 7% when purchasing their services. If I had a choice in respect of alternatives, I would abandon each and every one of them in a heartbeat.

In stating (lying) that these are costs are attributed to their banks' policies is a measure of the complete cynicism they have towards their customers.

No cartels or anti competitive behaviours here? Don't make me laugh.

Pariahs, the lot of them – including the people within them that dream up these utterly disgusting strategies.

Raymond J Goddard

Submitted by: Chris Lysaght
Date: 9 June 2011

Hi All,

I would like to propose two points in relation to your enquiry regarding credit card fees.

Firstly I believe that accommodation facilities such as hotels, motels resorts and the like should be unable to charge a credit card surcharge as most, particularly international accommodation houses, will not accept any other form of tender including cash. They will only accept cash if you have a credit card so they are exploiting their customers.

Secondly I believe that suppliers should be unable to charge for credit card payments. We are a book retailer and we are unable to charge our customers credit card fees as this would send the clients to the opposition, so we accept the charges we pay as part of our business costs. Yet the suppliers we purchase from charge us credit card fees as they know that we can't buy the books anywhere else. Again this is exploitation.

Could you please review these practices in your enquiry.

Many Thanks

Chris Lysaght

Submitted by: Craig Macbride
Date: 8 June 2011

I pointed out by email to the RBA in 2006 that companies in monopoly positions were charging up to 10% surcharges. The RBA's response totally failed to answer any of the issues I raised. It is pathetic that it seems to have taken you another 5 years to even wake up to problems that were inevitable and foreseeable 8 years ago and pointed out to you 5 years ago.

Your recent document says there is ‘increasing evidence’ of large surcharges. Well, of course there is. If you make overcharging legal and do nothing about it, of course more and more businesses will take advantage of it.

As I pointed out in 2006 in response to https://www.rba.gov.au/Speeches/2006/sp_ag_150506.html:

* You claim that ‘average merchant service fee for the MasterCard and Visa schemes is now around 0.9 per cent of the transaction value’. However, merchants who charge surcharges often charge 2–3% and occasionally 10% for Visa and MasterCard. How can it possibly be in consumers' interests for companies to be able to charge 10 times the merchant fee being charged to them?

In 5 years, all that has changed is that merchants have been encouraged to get on the gravy train, because others are getting away with it.

The RBA has handled this area with gross incompetence and total lack of foresight:

1) Complexity is not good for consumers. It wastes effort and leads to confusion. The huge variation in surcharges just makes price comparison harder, a factor that some retailers, especially in monopoly positions, use to their advantage.

2) Handing out an unlimited ability to add unwarranted charges inevitably means that some will do so. How could the RBA be stupid enough not to see that, and, having seen it over 5 years ago, still not to do anything about it?

4) You say that ‘the benefits … have been substantial’, while displaying a graph of surcharges rising, while merchant fees are reducing. The only substantial benefit is to retailers who wish to rip us off. The significant losers are the credit card companies, who are charging less, and the consumers, who are paying more.

Not only are we paying more, but because of the reduced merchant fees, the banks have reduced their credit card benefits (frequent flyer points, etc). If you bother to calculate the reduction in merchant fees and the reduction in credit card benefits, you will find that they are almost identical. The sum of the money saved is roughly zero and there is no evidence that the consumers are the ones who have received any benefit. Meanwhile, the downside is an uncertain mess that encourages uncompetitive over-charging in some market sectors.

5) As should be obvious from items 1-4 above, the card changes are an unmitigated failure. You tell us, the consumers, that we were supposed to benefit, but it didn't work. A poll in The Age in 2006 asked ‘Are you benefiting from changes to Australia's credit card payments system?’. The results when I looked were 8% yes to 92% no, one of the most definitive results _ever_ to an Age poll. It is clear that the public has _not_ benefited. Our benefit is measured by us, not by the RBA's statements of fantasy.

6) Given the above points, you should quit the self-aggrandisement.

Quit trying to peddle your own failed agenda, filling your documents with unreasonably positive, misleading descriptions of your own actions.

‘The removal of these rules has allowed merchants to pass on the cost of credit card and scheme debit card transactions to customers via surcharges’ might just as accurately be phrased thus: ‘The removal of these rules has allowed merchants to rip off consumers by adding any arbitrary surcharge they feel like to any transactions using a plastic card.’

In conclusion, the best thing for consumers would be to return to the fair, simple situation we had before the RBA interfered. However, while you continue to claim that your failed system is a success, you are clearly not interested in reality and are still trying to convince consumers that we are better off, despite the fact that we know we are not.

So, if you are going to continue to allow surcharges, you should at least minimise the level to which consumers are ripped off.

However, the one item that you constantly avoid mentioning is the significant cost of accepting cash and cheques: Security costs, labour in calculating the cash, labour in taking cash to the bank, bank fees for counting and/or depositing, etc. Accepting a non-card payment carries costs. As most of those costs don't exist for card payments, a fair card surcharge would be only the amount that the merchant fee exceeds the cost of accepting cash. If the cost of accepting cash is higher than the merchant fee, customers should receive a discount for using plastic.

Submitted by: Paul Myers
Date: 9 June 2011

I would like to make a short submission in response to the RBA's request and news reports on the issue. My submission will be short.

Basically all I would like to do is to put a suggestion that surcharges be regulated in such a way as to provide two caps based on the charge (incl GST). The caps would be related by the following algorithm:

For any amount less than a specified amount then a fixed surcharge shall apply and for all amounts greater than this specified amount a maximum surcharge of 1% may be applied. As an example, if an item is less than or equal to $100, a surcharge of $1 may be applied and for any amount greater than $100, a surcharge of up to but not greater than 1% of the total of the invoice may be charged.

There should also be a value below which NO surcharge may be charged, providing a three tiered structure, such as $0-$50 no surcharge may be applied, $51-$100 a fixed surcharge of $1 may be applied and for greater than $100 (ie $101 and over) a surcharge of up to a maximum of 1% may be charge. The application of a surcharge by a vendor must be optional not mandatory and it should be up to the vendor as to whether they apply the surcharge to particular customers and not to others. For example, a vendor may decide not to pass on the surcharge at all or not to pass it on to seniors and concession card holders, etc. Government  (Local, State, Territory & C'wealth) Departments, Agencies, etc, would NOT be allowed to pass on the surcharge at all.

Paul Myers

Addendum:  Any company or business which imposes a surcharge on credit card purchases MUST be required to disclose the amount and/or rate of surcharge that they are adding to a purchase when being paid via credit card and should also display that they charge a surcharge on credit card payments either on their website as well as on the window sticker for the cards that they accept.


Submitted by: Richard Ure
Date: 22 July 2011

Advances in payment methods are supposed to have reduced costs (including cash handling costs) yet with credit card charges at rates determined by the merchant, consumers have no idea how much the payment system is siphoning off in real charges to the merchant. Consumers may well be prepared to pay the actual transaction costs if they knew what they were but there is currently a widespread suspicion, especially with airlines, merchants are using these fees as part of their profit margin.

Consequently merchants should be required to disclose their actual transaction costs when imposing a credit card surcharge. There is no point requiring merchants to disclose all their surcharges in their headline price for a service and still impose an extra (excessive) credit card charge at the end of the transaction.

Merchants who provide a fee-free online payment option should be required (or at least expected) to offer that alternative to all consumers and not just those who use a particular computer type (e.g., POLi which does not support Linux or iOS).

I have just been informed by JetStar the way to avoid their credit card fees is to sign up with their Mastercard. Is this the sort of anti-competitive practice the Reserve Bank is happy with?

Richard Ure