Say Goodbye to Excessive Credit Card Charges on Thursday 1st September 2016
It’s finally happening, the Turnbull government passed legislation to rid us from excessive credit card charges when using our plastic. The ban comes into effect this Thursday 1st September that should be a relief for many Australian families across the country.
The ban will immediately prevent large businesses from charging excessive fees on credit cards and if they don’t stop they will face substantial fines for doing so. Smaller merchants will be given 12 months to make alterations to comply, so watch out for the large companies which haven’t reduced surcharges after Thursday. A few companies have already made announcements about changes e.g. Qantas and Virgin Australia.
The new regulations are already providing customers with great money saving opportunities. If you book a domestic flight costing $100 with Qantas before the 1st September for example and you pay by credit card you will be charged a 7% surcharge under its old fixed regime. However, from the 1st September book that same flight with a credit card and you will only have to pay a surcharge of 1.3% or $1.30 instead.
In my opinion it has been far too long that large corporations have been able to get away with astronomically high charges, where in other parts of the world this behaviour is not so rife. Customers are entitled to a fair deal but corporations haven’t been providing them with one when using a credit card, hence the interference from the Turnbull government.
Mark-ups of up to 2,670% on the actual cost to merchants for processing card transactions have simply become unacceptable and unjustifiable. Even though VISA and MasterCard announced back in 2013 that they would consider a compliance and auditing program to monitor excessive charges it would appear that this program had no effect. Even until today companies like Qantas, Virgin Australia, Jetstar and TigerAir were still surcharging customers to the high heavens with 4.3%, 7.9%, 4.2% and 17% respectively on domestic flights.
Besides flights, customers will also benefit from reduced charges on sports and concert tickets. Large ticketing firms will be subject to the ban so I look forward to reduced charges on my next concert too. Moving forward, the ban will come into effect on Thursday 1st September, but it’s the Australian Competition and Consumer Commission (ACCC) that will be responsible for enforcing the ban and ensuring that companies adhere to it.
The nations total credit card debt currently sits at record highs of $52.2 billion. Even though the recent changes to charges will have a positive effect on the amount we pay in surcharges, it’s really only a blip in the ocean. The credit card debt that attracts interest charges has dropped 11% over the past four years, which will save customers $700 million.
To put that figure into context, did you know that on average per year, we spend roughly $1.6 billion on surcharges for using our plastic. Therefore after Thursday we can expect to see ‘large retailers’ stopping their unnecessarily high fees. A large retailer is defined as any company in Australia that either has a gross turnover of more than $25 million or more than $12.5 million worth of assets or employs more than 50 people. Any business with less than the above in all areas will be held accountable from 1st September 2017.