+34
From October 1, Australian merchants can no longer add surcharges to card payments after the Reserve Bank changed rules, but some businesses may still apply them as they adjust.
From October 1, you should no longer see an additional charge applied to card payments. If your coffee costs $5, that is what you should expect to pay, at least in theory.
Reserve Bank Bans Card Surcharges
In practice, you may still see a surcharge on purchases as merchants and retailers adjust their approach. The Reserve Bank has changed the rules to allow card networks Mastercard, Visa and Eftpos to ban surcharges for credit, debit and prepaid card payments made in store, online, or via mobile wallets. PayPal, American Express and UnionPay are also removing surcharges from October 1.
This means merchants are no longer allowed to charge an extra fee when you tap or insert your card at the point of sale. Retailers must clearly display how much an item or service costs with any applicable surcharge. If you are buying a $5 coffee, the displayed price should look like $5.05 with card surcharge. They must also disable surcharging on their terminals and take down any payment surcharge notices on display.
Behind the scenes, the new regime lowers processing costs for merchants by capping interchange fees, which are the fees paid between banks every time the customer taps or swipes their bank card. That fee now goes from 0.8 per cent to a flat 0.3 per cent on Australian consumer credit cards. On domestic debit and prepaid cards, the ceiling has fallen from 10 cents, or 0.2 per cent, to 8 cents or 0.16 per cent.
Interchange Fees Drop For Merchants
Payment providers and banks have disabled the surcharge function on the terminals they control, but some older terminal machines do not automatically update and may not yet reflect the changes. The RBA and the banking industry have urged patience as some businesses make the transition. Some business leaders have warned that some communities may not know about or understand the changes, particularly small business owners of migrant backgrounds or those who do not speak English as a first language.
The surcharge ban does not include weekend and public holiday surcharges, which are still permitted. Will prices still go up? The short answer is quite likely. These payment costs have not disappeared; they are just no longer allowed to appear as a separate charge.
Most businesses are already facing and absorbing higher costs and overheads on many fronts and do not feel able to absorb any more, so many will raise prices to cover card costs. How do I dispute surcharges? The ACCC and RBA cannot help you here. Card networks Visa, Mastercard and Eftpos and payment providers Square, Tyro, Stripe and some banks are in charge of enforcing the surcharge ban, and will be held responsible if surcharges continue.
In the first instance, ask the merchant or retailer to clarify the surcharged amount before payment if possible. Request a refund on the surcharged amount if necessary, and if they refuse, the next step is to report any unauthorised surcharges to your bank or card provider.
Reporting Unauthorised Payment Surcharges
The ACCC and state consumer protection agencies, such as NSW Fair Trading and Consumer Affairs Victoria, will still be monitoring and enforcing consumer law to make sure businesses do not mislead customers about prices or reasons for price rises. The consumer watchdog has stated businesses are indeed allowed to offer discounts for a preferred payment method, like cash or PayID.
Payment method discounts should be clearly disclosed before consumers choose to book, order or pay, the ACCC states on its website. We may start seeing more businesses, especially smaller ones, shifting back to cash as a result. According to Cash Welcome campaign manager Jason Bryce, this is already happening. Most small retailers will raise prices to cover card costs and many will offer discounts for cash payments, he said.
So if you are keen to save your dollars, keep some notes and coins on you. Will banks find a way to pass on the lost revenue? Major banks have already wound back the generosity of credit card sign-on bonuses and rewards points earning rates, which were being funded by the higher interchange fees, and raising annual fees.
Banks Cut Credit Card Benefits
Commonwealth Bank has overhauled its loyalty program that pushes customers to spend rewards with Virgin's Velocity scheme instead of Qantas Frequent Flyer points. CBA customers who bundle multiple products, such as a mortgage or term deposits, will earn more points than those who have one account. Westpac has also announced fee hikes and cuts to benefits such as free travel insurance on its credit card line-up.
NAB has made a number of changes that impact MyCard credit card holders, formerly Citibank cards, most dramatically. Its premium Prestige card, which included 15 airport lounge visits, free hotel stay extensions and cashback on ride-shares, on top of generous points earning rates, has been scrapped entirely. American Express has also announced a scaling back of its airport lounge benefits. I am a business owner.
What should I do? It is your responsibility to make sure you do not continue to apply surcharges from today onwards. Get in touch with your bank or payment provider to implement the changes and update pricing details where you need to. Shop around for the best deal.
Corporate spending platform Archa's chief executive Oliver Kidd recommends asking your card provider these questions: What am I really paying on foreign exchange fees, including any new mark-ups? Has my credit limit changed without me knowing? Business owners should not assume their card still offers the same value it did a year ago, he said. If you are looking for more information, self-regulating body Australian Payments Network, AusPayNet, has put together an FAQ for consumers, businesses and payment providers. The article was reported by Jessica Yun.
theage
brisbanetimes:This story was compiled and edited by the HeadTopics newsroom and HT AI from the reports above.
Reserve Bank Of Australia Interchange Fees Cash Discounts Credit Card Rewards
Australia Latest News, Australia Headlines
Similar News: You can also read news stories similar to this one that we have collected from other news sources.
Card Payment Surcharges Ban: Small Businesses Struggle to AdaptDespite a new ban on credit and debit card surcharges coming into effect in October, many small businesses, particularly migrant-owned shops, remain unprepared. While the reforms aim to save consumers $1.6 billion annually and lower interchange fees, business owners worry about financial pressures and operational challenges.
Read more »
Australia Card Surcharge Ban Starts Thursday But Many Small Shops Are UnpreparedAustralia's ban on credit and debit card surcharges takes effect Thursday, but business groups warn many small and migrant-run shops are still unaware of the new rules and may keep charging surcharges.
Read more »
Small business owners rage against new card surcharge banAussie customers have been warned fee-free payments are a double-edged sword.
Read more »