RBA to ban "excessive" credit card fees

[awilcockson]

Time will tell. I have my doubts.

Reserve Bank of Australia to ban excessive card fees | News.com.au

 

[serfty]

I thought "excessive" credit card fees were already contrary to regulation.

Does this mean that actually they might try to enforce the law?

[edit]

nah, they're just planning to give the card service providers more power to dictate the fees charged by the retailer.

[/edit]

Posted on a wing and a prayer ...

 

[awilcockson]

I thought “excessive" credit card fees were already contrary to regulation.

Does this mean that actually they might try to enforce the law?

The article states that

He said the new standard would limit the surcharge imposed on customers, though it may not necessarily be capped at the cost of the transaction

and also that

He said credit card providers would be able to take action against businesses that imposed excessive surcharges on customers while still allowing businesses to recoup the costs of transaction.

 

[11sjw]

QF Intl's $30pp might be in the firing line?

 

[oz_mark]

Funny how something discussed on a thread in the last couple of days pops up as news today.

There is no effective mechanism at the moment to restrict surcharges. What the rba is proposing is to allow the schemes to write some limitation into the contracts.

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[trippin_the_rift]

10 bucks on this 'enhancement' resulting in more merchants surcharging.

 

[Stephen65]

Agreed. As soon as the RBA defines "excessive" a slightly lower charge will become the de facto standard.

 

[MEL_Traveller]

have I got the math right on this? I was looking at the Qantas pax figures, April 2011. Said they carried 506,000 pax internationally. YTD was 5,076,000.

Lets assume those people all took return journeys, so that is 2.5 million individuals. At $30 a pop that comes to $76 million.

Take away excessive fees (charge 1% merchant fee which will still be more than what they pay) and all of a sudden it looks like they'll cut their profit in half (or lose it all together).

Or have I got the math wrong?

 

[Simo]

I own a small business and I pay a lot less than what a lot bigger business's charge as a percentage.

I went to a servo and they charge 2% and they would do a lot more cash than what i would do.

I pay the same rate if it is a low cost CC or a Plat or what ever CC I pay the same rate.

 

[elbarto]

have I got the math right on this? I was looking at the Qantas pax figures, April 2011. Said they carried 506,000 pax internationally. YTD was 5,076,000.

Lets assume those people all took return journeys, so that is 2.5 million individuals. At $30 a pop that comes to $76 million.

Take away excessive fees (charge 1% merchant fee which will still be more than what they pay) and all of a sudden it looks like they'll cut their profit in half (or lose it all together).

Or have I got the math wrong?

I doubt they would have gotten 76 mill out of cc fees as corporate contracts don't always pay by card.


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[markis10]

I doubt they would have gotten 76 mill out of cc fees as corporate contracts don't always pay by card.


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Neither do Travel agents, which still account for a good part of the business.

 

[simongr]

I still think the RBA have gotten this wrong. Since they introduced the rules around CC fees and ATM fees to make it "easier for the consumer to make a choice" all that I have experienced is:

- Loss of free use of any ATM
- 1.5% surcharge at most/all hotels that I stay in (and I have to pay by card)
- greater proportion of merchants I use charging surcharge for Amex

These two changes do not seem to have been of any benefit to me personally.

 

[BAM1748]

QF Intl's $30pp might be in the firing line?

Let's hope so.

 

[oz_mark]

QF Intl's $30pp might be in the firing line?

I'd hope any flat rate fee gets shot. Qantas argue that they don't recover over their costs, but this seems to be an overall average position. Realistically, it should be done at a transaction level. It is hard to see how paying 7.70 for a $100 one way fare is not excessive, considering a $3000 return fare in J is also $7.70.

There is always the chance that it will become a lawyer fest arguing about what is reasonable and what is excessive.

 

[MEL_Traveller]

I'd hope any flat rate fee gets shot. Qantas argue that they don't recover over their costs, but this seems to be an overall average position. Realistically, it should be done at a transaction level. It is hard to see how paying 7.70 for a $100 one way fare is not excessive, considering a $3000 return fare in J is also $7.70.

There is always the chance that it will become a lawyer fest arguing about what is reasonable and what is excessive.

yeah - and that a First passenger paying $16000 to Europe pays the same as a passenger travelling on discount economy for $1900.

 

[Timtammi]

I own a small business and I pay a lot less than what a lot bigger business's charge as a percentage.

I went to a servo and they charge 2% and they would do a lot more cash than what i would do.

I pay the same rate if it is a low cost CC or a Plat or what ever CC I pay the same rate.

I'm in the same situation as you but due the low number of transactions via CC and taking into account the monthly admin fee my bank charges it averages out to cost me just under 2% per transaction. We charge 2% surcharge so we are just covering our costs. I know plenty of people are paying less for their merchant fees but if you are small fry then you don't have any leverage to get your fees reduced. Probably some of our customers think we are ripping them off but as we work in a low margin industry I have to recover these costs some way.

Cheers

 

[simongr]

Out of interest what proportion of your sales are CC based? If mostly CC based then why not roll if into your pricing?

 

[Timtammi]

Its a very small proportion who choose to pay by CC, off the top of my head I would say only 5% of sales. We are primarily selling to trade so many have credit accounts with us and we also accept EFT for those who don't. Perhaps more would pay by CC if there was no surcharge but then I would need to put the price up higher for everyone to account for the increased cost of that.

 

[awilcockson]

We are primarily selling to trade so many have credit accounts

Surely this costs you more than the CC fees?

 

[Daggs01]

when the RBA allowed surcharging it opened up a can of worms with that many merchants double dip.

For example. The perception is amex has a 3% merchant fee so a retailer charges what people perceive to be their transaction cost. Where in actual fact the merchant is only paying 2.2%

I don't understand why merchants don't include the transaction or merchant fees in the cost of running a business.

A lot of amex card members wont use merchants that surcharge because I want my points and if I can get the same thing elsewhere I'll go there.

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