RBA won’t put brake on surcharging
22 April 2008
The Reserve Bank of Australia has missed an opportunity to protect shoppers from price gouging by merchants imposing surcharges on card transactions, according to the credit union and building society industry body Abacus – Australian Mutuals.
The RBA says that since the beginning of 2003 when it removed the ‘no-surcharge rule’ from payment card schemes, the number of merchants surcharging has risen substantially. Now almost a quarter of very large merchants impose a surcharge. The RBA welcomes the “growing prevalence of surcharging”.
The RBA has released a review of its payments system reforms and “preliminary conclusions” about its approach in future.
The RBA says it considered placing a cap on the size of any surcharge imposed by merchants but was “not persuaded that the isolated examples of high surcharges are sufficient grounds to reimpose restrictions on merchant pricing for all merchants”, according to the review.
Credit unions and building societies are concerned that cardholder interests are not adequately protected in the surcharging debate.
“Merchants are entitled to impose a surcharge that is related to their costs but cardholders should have some protection from blatant gouging and predatory behaviour,” said Louise Petschler, CEO of Abacus.
“Merchants have been the big winners from the RBA’s payments reforms, to the tune of another $1.1 billion in the past year according to the RBA’s own estimate,” Petschler said.
“Allowing card schemes to put a cap on merchant surcharges would be welcome news for cardholders.
“The RBA’s own figures show that the average surcharge for a transaction on a MasterCard or Visa card is around one per cent while the merchant’s cost – the merchant service fee – has fallen since 2003 from around 1.5 per cent to 0.8 per cent,” Petschler said.
Abacus will consider the RBA’s review in detail and lodge a submission in due course.
Abacus represents 135 credit unions and 9 mutual building societies with 4.6 million members. Credit unions and mutual building societies provide their members with access to the payments system though branches and agencies, EFTPOS and ATM networks, the Visa and MasterCard schemes, direct debits and credits, internet banking, B-Pay and cheques.
Contact:
Louise Petschler, Abacus CEO
02 8299 9046; 0408 239 226;
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Luke Lawler, Abacus Senior Adviser
02 6232 6666, 0418 213 025,
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