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Jetstar may be forced to drop its '1,187% mark-up' on credit card surcharges

Photo: Joe Raedle/Getty Images.

The days of paying an $8.50 credit card surcharge on a $100 Jetstar flight are numbered after new laws targeting excessive charges were passed by the Australian Senate yesterday.

The Competition and Consumer Amendment (Payment Surcharges) Bill gives the competition watchdog, the ACCC, the power to investigate and act on excessive card charges by airlines, ticketing and taxi companies.

Consumer advocacy group Choice found that in some instances, the surcharge was 10 times the cost of processing credit card payments.

Choice spokesperson Tom Godfrey said companies such as Qantas and Virgin should drop their surcharges before the legislation, expected to start on July 1, comes into play.

An analysis of airline surcharges by the consumer lobby group found that the $7 Qantas surcharge on a cheap flight was 348% higher than it should be, and Jetstar’s $8.50 surcharge a 1,187% mark-up.

“We are delighted that the ACCC has finally been given the power to investigate if a surcharge is fair and issue infringement notices of up to $108,000 for companies that don’t play by the rules,” Godfrey said.

Under the new laws, any surcharge will have to reflect the true cost of credit card transaction for any business.

Announcing the passing of the legislation as part of the government’s response to the Financial System Inquiry, treasurer Scott Morrison said it would help protect Australian consumers.

“Whilst many merchants do pass on costs fairly, some merchants engage in this practice abusively. Consumers are entitled to a fair deal,” he said.

The new rules are also likely to target businesses such as Cabcharge, which saw its credit card surcharge in NSW drop from 10% to 5% under new laws implemented by the state government, while the “processing” fees charged by ticketing companies such as Ticketek are also expected to come under increased scrutiny.

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