(Updated 9 November 2012 - Item 4 added. Updated 24 December 2012 - Items 5 and 6 added. Updated 10 January 2014 - Item 8 added.)
(Updated 9 January 2014 - link to article from "The Age" added and the only 'bouquet' so far!)
09 January 2014 - for further information on the current situation in Australia (and how there is still a long way to go) see the following feature article from "The Age" (Melbourne):
http://www.theage.com.au/national/rba-reforms-fail-to-curb-inflated-credit-card-surcharges-on-airline-bookings-20140108-30hm5.html
A Bouquet at last!
By happy coincidence I was reading through the accumulated 'dogalogues' at home and came across a flier for OzCruising, which claims to be "Australia's Largest Online Cruise Specialist" (www.ozcruising.com.au). On the bottom of the flier it specifically states: "No credit card surcharge for Amex, MasterCard or Visa". Good on them for their consumer-friendly attitude!
Commentary thread started on 09 November 2012:
I am not exactly sure when credit card surcharges were permitted by the Reserve Bank and started to come into vogue as a manner in which firms could pass on the cost of doing business to consumers rather than absorbing it, but from my perspective as a consumer it causes nothing but grief. If you do not wish to pay what is in essence a penalty for using your credit card, you are compelled to pay by EFT from a bank account. This involves more time, trouble and uncertainty for the consumer (as the transaction cannot be confirmed until receipt of funds is confirmed) and presumably it results in additional time and costs for the supplier, as these transactions have to be processed on a case-by-case basis. However, if consumers pay by credit card, the merchant is guaranteed of receiving the payment in a very timely fashion with no further complications. It is also somewhat puzzling as to why businesses do not wish to take advantage of tax deductibility for such fees and charges!
In order to raise awareness (and perhaps even garner a groundswell of opposition) I will mention three recent cases which I have become aware of.
1. Iceberg Events Pty Ltd
This company recently organised the International Conference of Aerospace Medicine in Melbourne. There were hundreds of delegates from Australia and overseas. It seemed to me to be a very unfriendly welcome to Australia to say to the international delegates that yes, you can have the most convenient option of payment by credit card without having to worry about exchange rates and international transfers, but by the way, we will be charging you a fee over and above the (not inexpensive) conference registration fee to do this. Do you have any other choice? No, not really if you are from overseas. Domestic registrants had the cumbersome option of EFT payment. The 2% surcharge was not mentioned on the registration form and only became apparent when working your way through the payment procedure online.
2. Jetstar Airways
One would think that payment by credit card is the perfect medium for travel bookings and that any other option would be a lot more time-consuming and cumbersome. However, many airlines (and travel agents) inflict levy credit card surcharges on their 'captive audience'. Jetstar charges the outrageous amount of $30 per booking to use your credit card, except if you have a Jetstar branded credit card, in which case you pay nothing extra. The only way of avoiding this is to pay by EFT within strict time limits, and then the booking is held in abeyance until payment is confirmed, so in the meanwhile travel plans are effectively in limbo. So, you are forced either to have a Jetstar card or to pay by EFT unless you want to pay a fee for the privilege of using your own credit card. Most people already pay an annual fee for having a credit card, and paying surcharges can add considerably to the cost of using one. Having to revert to EFT payments instead of using your card also means that people miss out on the Frequent Flyer etc points they would otherwise have accrued.
3. Great Southern Rail
This company runs The Ghan, The Indian Pacific, The Overland and The Southern Spirit train services. The 1.2% credit card surcharge (which would add a not insignificant amount to the booking cost) is not mentioned in their print advertising or when initially enquiring about booking availability and does not appear in the printed Terms and Conditions. Once again, you would think that it is advantageous to the merchant in every way to receive payment by credit card and would involve extra staff and administration costs to process EFT payments, but this is exactly what you are required to do if you want to avoid paying the surcharge.
4. Karworx Vehicle Service Centre
I took my car here for a service as part of a voucher offer through Yellow Pages. A 2% credit card surcharge was not mentioned at the time of booking and I only found out about it once I arrived and was asked to fill in some information on a sheet. This was going to cause me a lot of additional trouble and inconvenience to arrange payment as I did not actually have an EFTPOS card with me as I did not know it would be needed, but in the end the manager kindly offered to waive the credit card surcharge on this occasion in order to facilitate payment at the time of collection. They also gave me a mini-flashlight for my keychain and said that all people with Yellow Pages vouchers were being offered "free labour" for their next car service as well, so full marks for trying with regard to good customer relations!
5. Aldi Grocery Stores
Aldi levies a credit card surcharge on all purchases which requires you to pay by cash or eftpos if you wish to avoid it. The other annoying thing about Aldi is that you unpack your trolley to put the goods through the register, then the cashier puts them back into the trolley and then you take the trolley elsewhere and then unpack them another time and re-pack them into bags ... At least the other supermarkets have not yet resorted to this multiple-handling and time-intensive (for the consumer) "solution"!
6. Toyota Cairns
Credit card fees: 1% on Visa/Mastercard, 2% on corporate cards and 3% on American Express. Fees are charged on the portion of any invoice exceeding $200. The justification is that "the bank charges us these fees so we have to charge you these fees".
7. Megabuy.com.au
Amongst other dubious practices (see separate blog posting), this online store slugs consumers with a hefty credit card handling fee ($8.08 on a $299 purchase) in addition to delivery costs. Dealing with this outfit is not recommended.
8. ICC Cricket World Cup 2015
Along with other online ticket providers like Ticketek, a somewhat puzzling "service/delivery fee" of $6.00 is levied for tickets to print at home. Yes, that's right! For their largesse in sending you a PDF of the tickets you have already paid handsomely for and which you will print at home using your own paper, toner and electricity, an automatic extra charge is levied. If you want your tickets posted using standard mail, it is $7.00 and Registered Post is $10.00. Quite mysterious how it only costs $1.00 more when they have to print the tickets, supply an envelope and pay postage! This brings me to another bugbear - most of the ticketing agencies will not send tickets to a PO Box!!! How can this make sense? I have a nice secure PO Box which is much safer than my letterbox at home which is open to the street and anyone can help themselves to the mail, and it simply infuriates me that ticket providers and various online retailers will not deliver to a PO Box. Shame on you all!
Oh yes, the credit card surcharge - 1.75% for Mastercard and Visa and 2.75% for Diners or Amex. Is there any other way to pay and avoid the surcharge? NO!!
As a result my ticket purchase was inflated from $180 to $189.15 - a tidy little extra earner of 5% on top of the purchase price.
Commentary ...
Credit card surcharges are not consumer-friendly and paying by EFT in order to avoid them disadvantages and inconveniences the consumer. Requiring consumers to pay by EFT must necessarily involve additional time, costs and administrative procedures for the merchant, so one really needs to ask whether it is cost effective from the merchant's perspective and they would be better off absorbing the credit card processing costs (as used to be the case) as a 'cost of doing business' and receiving safe and secure payment. These card processing costs are also tax-deductible to the merchant as a 'cost of doing business'. Many of the merchants levying surcharges are in a monopoly position, so the consumer does not have the choice of going elsewhere and perhaps finding a merchant who does not levy a credit card surcharge. There is an imbalance of power in favour of the merchant and the consumer is powerless to change the situation if they cannot take their business elsewhere.
Consumers have the power to militate for change and to indicate to merchants that they are not doing themselves any favours in terms of initial or repeat business or recommendations if they do levy a credit card surcharge. Change will only occur if we make it happen - if credit card surcharges and their implications offend you, speak out!
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