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Credit card surcharges with no alternative payment option?

Diadrat5

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A few years ago, the RBA ruled that businesses are allowed to charge credit card surcharges commensurate with the cost incurred by their bank. But my understanding was that an alternative, fee-free payment method needed to be available - otherwise the surcharge needs to be included in the up-front price. Am I mistaken?

I've seen several examples recently where a credit surcharge is added at the final payment stage, even though credit card is the only possible way to pay.

For example, when booking a flight with FlyPelican, they add on a credit card surcharge of 1% for Visa/Mastercard or 3% for Amex/Diners Club. But there is literally no other payment option provided. In this case, shouldn't the 1% surcharge by included in the up-front price - otherwise it's drip pricing because the total minimum charge is not displayed upfront?

It's not just airlines. I recently visited a restaurant which only accepted card payments - yet added a surcharge for this.

View attachment 231340

What am I missing? Can businesses legally do this in Australia?
Back in the bad old days, it was deemed that merchants were loading the purchase price of goods and services with the credit card surcharge, regardless of the payment type used (e.g. cash, cheques, debit cards). This in effect meant those who didn't pay by credit card were subsidising those who did. Hence the RBA made it illegal to include the surcharge in the purchase price but left it to the merchants to levy the surcharge separately if payment was by credit card. Their logic was that competition would keep a lid on price gouging (via the surcharge). As we all know, the reality is that there is a rort on this surcharging levy which sadly we as customers end up paying. The merchant's logic is that it will go towards their MSF (Merchant Services Fee) for accepting credit card payments. Good on you for complaining to ACCC. There needs to be a groundswell of complaints before the ACCC will do anything.
 

JohnPhelan

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Providing a payment system for your customers is another "cost of doing business". It is ridiculous to impose a surcharge for one particular form of payment and we should revert to the system that existed for decades - that it was illegal to surcharge card payments.

I don't expect to be hit with a surcharge for the amount of electricity the business used while I was in the shop/restaurant, nor pay "my share" of the airconditioning costs for my time in the premises. Payment mechanism should be the same. I can pay in cash if they don't want to bear the cost of offering card payment. Or more likely - I will just take my business elsewhere.
 
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JohnPhelan

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Handling cash is not cheap either - a fact that is often conveniently ignored. For high volume merchants, it would probably cost them a whole lot more if all sales were cash as compared to all on a credit card.

Absolutely - and imagine the outrage if businesses started applying a surcharge for cash payments!
 
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NM

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Handling cash is not cheap either - a fact that is often conveniently ignored. For high volume merchants, it would probably cost them a whole lot more if all sales were cash as compared to all on a credit card.
Yes, but for some people/businesses, the cost of handling cash is more than offset by the reduction in tax costs :eek:.
 

Daver6

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I'd say that I thought it was illegal and that if they proceeded to charge me I would report them.

I'd go one further. I'd tell them I'm not paying the surcharge. If they won't budge, I'd simply say I'm not paying then. Let them chase me for the money and realise what they're trying to do is illegal.
 

madrooster

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Absolutely - and imagine the outrage if businesses started applying a surcharge for cash payments!

In Brisbane I've seen places offer a discount for paying in cash instead. Eg. 5% discount if you pay with cash, otherwise full price. Supposedly legal, but equally bad.
 

Mattg

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I got a response from the ACCC's Infocentre. It's quite long, but here are the main points:

Thank you for writing to us about credit card surcharges. We have recorded the details of your report. We can offer you general information about the ban on excessive surcharging . The ACCC cannot make formal decisions on whether a person or business has breached the law as only the courts can do this so we are unable to tell you if that practice is considered drip pricing.
Ban on excessive payment surcharges
If a business chooses to impose a surcharge on its customers for making a payment using a credit, debit or prepaid card, the level of the surcharge must not be excessive. The limit is linked to the direct costs of the payment method such as bank fees and terminal costs.

The ban has no effect on businesses that choose not to impose a payment surcharge, such as the many businesses in Australia that incorporate payment system costs into their overall prices.

A payment surcharge is excessive if the amount of the surcharge exceeds the permitted surcharge in the Reserve Bank of Australia (RBA) Standard.

The ban does not alter a business’ existing Australian Consumer Law obligations. A business must not make false or misleading representations about pricing, or engage in component or partial pricing, where the upfront advertised price only constitutes part of the total price.

Check out our website for more information about excessive payment surcharges and other laws that apply to displaying prices.

They go on to suggest writing a complaint letter to the business, or contacting NSW Fair Trading if you have tried and failed to resolve your "dispute" directly with the business.

I do have to wonder what the point is of outlawing excessive payment surchrges when the practice is widespread and nobody seems to do anything about it. All of the various government agencies seem to think the enforcement of this is someone else's responsibility.
 

MEL_Traveller

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yeah... I wonder if the state-based consumer bodies are actually going to be better at offering practical advice? ACCC never really seems to want to get involved in these sorts of things.
 

Mattg

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yeah... I wonder if the state-based consumer bodies are actually going to be better at offering practical advice? ACCC never really seems to want to get involved in these sorts of things.

The ACCC couldn't even advise whether they thought the practice was illegal or not!

Interesting for them to now claim that "only the courts can decide" whether a business has breached the law, yet many businesses (including Virgin Australia) quoted the ACCC's guidance as legal justification for not refunding flights they had cancelled due to covid-19.
 

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