The Reserve Bank of Australia has launched a review of the country’s credit card surcharging practices after receiving complaints that retailers were assessing fees well in excess of their card-acceptance costs.
The Payment Systems Board of the central bank has issued a paper outlining the process of its review and how it would revisit the reforms it pushed through early last decade to make payment card costs more transparent.
The board imposed standards requiring the card brands to remove their no-surcharge rules, starting with MasterCard Worldwide and Visa Inc. credit cards in 2003 and then adding Visa debit cards in 2007.
The removal of those rules allowed merchants to pass on their cost to accept cards to customers through surcharges. But some merchants are assessing fees higher the average cost to accept the cards, according to the board.
In December, the average surcharge for MasterCard credit card use was 1.8% of the sale. It was 1.9% for Visa credit cards, 2.9% for American Express cards, and 4% for Diners Club cards, according to the board’s data.
These average surcharge rates equate to 1 percentage point higher than merchant-service fees for AmEx, MasterCard and Visa card acceptance, and about 1.8 percentage points higher that the cost to accept Diners Club cards, the data reveal.
As such, the board is considering modifying the standards to allow the card brands to limit the size of any merchant surcharges. The board has proposed two options for public feedback through July 20.
Under one option, the Payment Systems Board could determine a specific permissible cap, possibly expressed as a percentage of the sale. The other option would be to modify the standards to enable the card brands to limit how much merchants could surcharge to an amount that either is reasonably related, or equal to, their cost to accept the cards.
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