When was the last time you remember feeling annoyed because you had to pay a surcharge for using your credit card, not that long ago right? It’s incredibly frustrating extra cost to have to pay simply for the convenience of using your card.
Certain airlines are known to charge customers up to $8.50 in credit card fees despite their payment providers only charging them $0.95 in some cases. This is why there are new guidelines coming into force to prevent the worst offenders from blindly robbing customers, namely hotels and airlines. This could provide customers with potential savings adding up to billions per year.
The concern from consumer advocate groups is that once the government has established guidelines around excessive surcharges, there's a potential for thousands of smaller retailers to embrace the practice. There is a campaign running to safeguard the new tap-and-go technology that we have come to love, with a coalition of retailers pledging to keep its payments surcharge-free.
The Reserve Bank of Australia’s Payments System Board will announce the new guidelines for credit card surcharges in the coming week. The public will no doubt be hoping to see a ban on the bad practices surrounding surcharges from both airlines as well as hotels. These guidelines are expected to curb charging customers excessively, however there wont be a complete ban, so surcharging will still be allowed as long as it’s not excessive. This is what has caused an element of fear in the market, because once everything is set, other retailers may think it’s the norm to charge small surcharges.
The New Changes
Once the guidelines come into full effect, the savings for consumers are expected to be around $1.6 billion per year. This is the average cost that Australians currently fork out each year on surcharges to large companies. We owe our thanks to Queensland businessman, Klaus Bartosch who put this scandal on the map and persuaded the ACCC to come down more heavily on mischievous companies. As a result, a article written in February exemplified exactly how the ACCC would fine corporations charging high surcharges (up to a maximum of $108,000).
The fear Bartosch is concerned may become a reality is that if smaller companies believe that everyone else is surcharging, they may feel that 1% is fine because surely the government sanctioned it since it's not considered excessive. The argument lies with the fact that whilst we would potentially save $1.6 billion a year on surcharges collectively, we may be opening Pandora’s box to a whole new world of surcharges from smaller companies.
If more companies do introduce surcharges to their bills, then this could open up the opportunity for smaller companies to distinguish themselves through no charges. It all lies down to what the customer believes is right. If you were considering coffee at two places and saw two little signs outside of these stores - one saying ‘No Surcharges’ and the other saying ‘Small Surcharges’ - then which would you more likely enter?
90% of customers made it clear through the campaigns research that they would more likely take their business elsewhere if they had the opportunity to avoid paying surcharges. This makes the subject of fees important to retailers who want repeat business.
Numerous companies have realised this and many have signed up to the Surcharge Free Campaign including: The Iconic, Platinum Restaurant Group, House, The Beaufort Bar, Coco Republic, Cannings Butchers, Ready Track, and Germanicos Tailors.
The campaign is funded by American Express and receives support from trade representative organisations such as the National Retail Association, Hair and Beauty Australia, JCB and The Retail Doctor.