Attention Red Roo - Credit Card Surcharges

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MEL_Traveller

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Red Roo

Can you please outline the qantas approach to credit card surcharges when booking flights?

A friend has just booked a return to Asia for $1000 but there was a credit card surcharge of $30.

Does this reflect the RBA guidelines that credit card surcharges should reflect the actual cost of recovery, and if so, how?

I am not interested - as part of the answer - that there are fee-free payment options. There are good reasons why people want to use credit cards rather than bpay (for example to be covered by insurance policies, or to earn points, or for purchase protection).

With thanks in advance.
 
I suspect whatever answer is given plenty won't like or accept it as it will come across as a canned response with appropriate levels of spin included. With all due respect to Red Roo (whose participation in these forums I definitely appreciate) he/she can only answer as QF would like he/she to answer.
 
$1000 but there was a credit card surcharge of $30.

Does this reflect the RBA guidelines that credit card surcharges should reflect the actual cost of recovery, and if so, how?

For what it's worth, $30 on a $1000 fare - or 3% - isn't outrageous, in my opinion. My guess is that Qantas's merchant fee for Visa and Mastercard would be a bit under 1% and for Amex and Diners maybe double. You could allow a little extra for overheads. 3% is probably higher than it should be, but not as high, on a percentage basis, as the flat $7 to $8.50 credit card surcharge per booking you pay for a domestic flight that might cost you as little as $29.
 
I thought all Airlines classed surcharges as a "Booking & Service Fee".
So in effect you are paying the credit card fee's plus what ever they want as a service fee on top.

Bit like a postage and handling charge.
Postage might be $5 but the handling charge is another $10 etc.
 
For what it's worth, $30 on a $1000 fare - or 3% - isn't outrageous, in my opinion. My guess is that Qantas's merchant fee for Visa and Mastercard would be a bit under 1% and for Amex and Diners maybe double. You could allow a little extra for overheads. 3% is probably higher than it should be, but not as high, on a percentage basis, as the flat $7 to $8.50 credit card surcharge per booking you pay for a domestic flight that might cost you as little as $29.

All the answers are in this link:
Schedule of Fees for bookings made from Australia | Qantas

On the flipside, $30 for a $30,000 return F fare (0.1%) isn't outrageous ;)

The link to using a cc to buy a ticket but with no cc fee is here:
Buy a Gift Voucher | Qantas
 
TG charge $30, SQ charge $25, QF charge $30... in fact most airlines add on this fee ex-australia. $30 can actually be very good for expensive fares on amex
 
For what it's worth, $30 on a $1000 fare - or 3% - isn't outrageous, in my opinion. My guess is that Qantas's merchant fee for Visa and Mastercard would be a bit under 1% and for Amex and Diners maybe double. You could allow a little extra for overheads. 3% is probably higher than it should be, but not as high, on a percentage basis, as the flat $7 to $8.50 credit card surcharge per booking you pay for a domestic flight that might cost you as little as $29.


I paid a restaurant bill today with Amex and was charged 3%.
 
I paid a restaurant bill today with Amex and was charged 3%.
The merchant fee goes down as the business's credit card spend goes up. (It also varies somewhat based on some other factors such as type of business, which goes to credit card fraud risk, and negotiation at time of striking the deal.) So a restaurant might get charged 3% by Amex but Qantas, with its substantially higher volumes, would almost certainly get charged less. Which is why my guesstimate was around the 2% mark.

A few years ago (last time I had to research it) typical businesses paid about 1.7% for Visa/Mastercard and around 3% for Amex/Diners (if I recall correctly), but very high volume businesses such as supermarkets paid around 1% for Visa/MC, which is what I'm assuming Qantas can get.
 
The merchant fee goes down as the business's credit card spend goes up. (It also varies somewhat based on some other factors such as type of business, which goes to credit card fraud risk, and negotiation at time of striking the deal.) So a restaurant might get charged 3% by Amex but Qantas, with its substantially higher volumes, would almost certainly get charged less. Which is why my guesstimate was around the 2% mark.

A few years ago (last time I had to research it) typical businesses paid about 1.7% for Visa/Mastercard and around 3% for Amex/Diners (if I recall correctly), but very high volume businesses such as supermarkets paid around 1% for Visa/MC, which is what I'm assuming Qantas can get.

If you're paying 1.7% you're not hounding your bank manager enough ;)

15 years ago I was getting 1.5% on Visa/MC, and that was a start-up Internet company with no track record.

Keeping in mind, that merchant charges are now far, far more complex. Credit Card Processors will now charge based on the sub-type of card, eg a regular Visa/MC may be 0.9%, a Platinum version of said cards may be 1.5% and Signature/World/World Elite card may be 1.7% (just as an example, no idea if they're right).

That's why banks push the 'platinum' card to everyone (hell, my debit card is a platinum debit, presumably so the banks make more off the per-swipe merchant fee when I buy stuff).

I believe Woolworths actually negotiated a 0% deal at one stage as they removed the option to use Visa/MC for debit for quite some time (had to use savings/cheque).

Whilst Amex are expensive, I believe there are 2 reasons merchants do not like to accept it. 1) They settle the amount to your account with merchant fees already deducted (vs Visa and MC that settle the full amount, and then debit the fees at the end of the month, which is much more simple for accounting) and 2) they take a lot longer than Visa or MC to settle to your account (Which can be a not unsubstantial amount of cash for a small business).

The crystal clear world of credit cards ;)
 
For what it's worth, $30 on a $1000 fare - or 3% - isn't outrageous, in my opinion. My guess is that Qantas's merchant fee for Visa and Mastercard would be a bit under 1% and for Amex and Diners maybe double. You could allow a little extra for overheads. 3% is probably higher than it should be, but not as high, on a percentage basis, as the flat $7 to $8.50 credit card surcharge per booking you pay for a domestic flight that might cost you as little as $29.


Qantas would be lucky if their actual cost from Amex was 1% and more like 0.3 -0.5% for MC & Visa :mrgreen:
 
Dear Red Roo,

Qantas should not charge any surcharge or any booking fee i.e. Phone bookings

Think about it for a second Red Roo & QF, were you to go ahead and QF have no charges, then from this moment onwards QF would have one feature making it stand out from the crowd. Enticing people to want to buy Qantas international and domestic

These charges are a penalty for booking with Qantas! So don't shoot yourself in the foot Qantas. Your ticket pricing is already more expensive then others in general.

This action of not having any extra charges should be enough to recoup your meagre costs as this sort of offer would entice Qantas customers & ultimately increase your revenue as ticket sales grow.

.……

Another shoot in the foot example: Qantas actively discourage you from upgrading yourself for cash (especially a the day or two before departure ) when carrying a discounted economy ticket. Which work frequently give you. I fight to have them book Qantas anyhow. (When booking several days out is not an answer at the moment).

How is this rule revenue raising for Qantas discouraging people handing over cash for upgrades by forbidding it. QF you pay big bucks for those managers all you can come with is punish the punters! Just for flying with you. It's called loyalty bashing. One can only take so much before turning our proverbial cheek the other way.

Your competitors are only to happy to have us, status matching ...... Can you really afford to push us loyal customers away any more than you currently do?
 
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Keeping in mind, that merchant charges are now far, far more complex. Credit Card Processors will now charge based on the sub-type of card, eg a regular Visa/MC may be 0.9%, a Platinum version of said cards may be 1.5% and Signature/World/World Elite card may be 1.7% (just as an example, no idea if they're right).

That's why banks push the 'platinum' card to everyone (hell, my debit card is a platinum debit, presumably so the banks make more off the per-swipe merchant fee when I buy stuff).

Interesting, I would have thought that the main reason why they push the platinum cards is because of the higher credit limit!
 
Interesting, I would have thought that the main reason why they push the platinum cards is because of the higher credit limit!

I'm sure that's the public reason but when they did a platinum debit card it kinda made it obvious ;)
 
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Whilst Amex are expensive, I believe there are 2 reasons merchants do not like to accept it. 1) They settle the amount to your account with merchant fees already deducted (vs Visa and MC that settle the full amount, and then debit the fees at the end of the month, which is much more simple for accounting)


AMEX has changed this in the last few months and is in the process of rolling it out. They now settle like the banks - gross amount with the fees debited at the end of the month.

I have a small business and our Visa/MC rate is quite a bit less than 1%, and that's what's known as a "blended rate" which means it applies to bog-standard credit cards and also to "premium" cards (e.g. Platinum cards). AMEX used to do deals at around 1.2% locally but there was a clampdown a couple of years ago and I am told that 1.99% is now the most common rate. QF wouldn't be paying that rate though.

So any business charging 3% on AMEX is profiteering. Plain and simple.
 
AMEX has changed this in the last few months and is in the process of rolling it out. They now settle like the banks - gross amount with the fees debited at the end of the month.

I have a small business and our Visa/MC rate is quite a bit less than 1%, and that's what's known as a "blended rate" which means it applies to bog-standard credit cards and also to "premium" cards (e.g. Platinum cards). AMEX used to do deals at around 1.2% locally but there was a clampdown a couple of years ago and I am told that 1.99% is now the most common rate. QF wouldn't be paying that rate though.

So any business charging 3% on AMEX is profiteering. Plain and simple.

Great to hear that Amex is finally getting their gear together though. I've found Amex acceptance has improved significantly at least, so this should only assist its penetration.
 
And the thing everyone forgets about when considering what rates merchants pay, is that alternative payment methods are not nil cost.

What is the merchant going to do (assuming this is an over-the-counter sort of situation) - take cash or a cheque. Obvious risks with cheques bouncing, not to mention time and overhead to process and bank, and then clearance time, as well as the bank fees on the collection items. Taking cash - then cash handling (in large amounts), is far from cheap. Security, insurance, cost of counting, bank fees on deposits all add up.

If you are not over the counter, then direct credit/debit and BPay all have a certain fee level (as well as set up costs etc.), as well as a degree of administrative overhead.

It would satisfy me if the ability to charge a CC surcharge was restricted not to the reasonable costs of acceptance, but the reasonable provable difference between costs of acceptance and the real cost of acceptance of the "free" alternative. You may find there should actually be a discount for CC payment - not a surcharge (and this isn't stupid - that is actually the case for some cards in some Asian cities).
 
And the thing everyone forgets about when considering what rates merchants pay, is that alternative payment methods are not nil cost.

What is the merchant going to do (assuming this is an over-the-counter sort of situation) - take cash or a cheque. Obvious risks with cheques bouncing, not to mention time and overhead to process and bank, and then clearance time, as well as the bank fees on the collection items. Taking cash - then cash handling (in large amounts), is far from cheap. Security, insurance, cost of counting, bank fees on deposits all add up.

If you are not over the counter, then direct credit/debit and BPay all have a certain fee level (as well as set up costs etc.), as well as a degree of administrative overhead.

It would satisfy me if the ability to charge a CC surcharge was restricted not to the reasonable costs of acceptance, but the reasonable provable difference between costs of acceptance and the real cost of acceptance of the "free" alternative. You may find there should actually be a discount for CC payment - not a surcharge (and this isn't stupid - that is actually the case for some cards in some Asian cities).

My main pet peeve is the fact that, as a rule, credit cards are the cheapest payment method for retailers to handle. It's safer than cash, and much less work, yet they encourage people to pay with cash (by not incurring a surcharge) rather than penalising them. Cash handling is more expensive overall than credit card.

PayPal actually costs a significant amount more than regular merchant facilities, yet companies also reward people with no fee for using this.

The math is strange to say the least. I'm still in favour of abolishing surcharges and having them factored into the retail price; rent, utilities and everything else are, why should a cost of processing a transaction be separated out (and don't get me started on hotels and their fees...)?
 
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