Plane and concert tickets should get a little cheaper from this week when new rules on credit card surcharges come into effect on Thursday, September 1.
That means charges like Tiger and Jetstar’s whopping $8.50 credit card payment fee will go, four years after the Reserve Bank of Australia first banned excessive surcharges that cost consumers an estimated $1.6 billion annually.
Under the new laws against “excessive” card fees, merchants can only charge an amount that reflect the actual cost of the transaction.
The Australian Competition and Consumer Commission (ACCC) now has the power to enforce the rules, with watchdog boss Rod Sims declaring that businesses should only charge 0.5% on debit card transactions and 1-1.5% for credit cards. For American Express and Diners Club, it’s up to 2%.
Big businesses have to comply with the new rules from September 1, 2016, while smaller businesses have an extra year, until September 1, 2017, to comply.
As a result, airlines such as Qantas announced it was moving from a flat fee of $7 for domestic and $30 for international flights to a 1.3% surcharge. That means a return $300 fare will have a $3.90 credit card surcharge from Thursday. The charges are capped at $11 on domestic flights and $70 on international.
Virgin Australia currently slugs passengers with $7.70 credit card fee “per person, per booking” on domestic fares, $10 to fly trans-Tasman and $30 on international trips. The airline said it will comply with the new rules but has yet to announce what it will charge, although the airline is introducing a new fare structure on September 7.
And with less that a week to go before it will be forced to comply, Virgin Australia was still justifying a $15.40 fee, telling one customer on Twitter that the fee was used to recover the costs of “bookings paid for by credit or debit card including the merchant fees of the various credit card companies, payment processing costs, administration costs, and the cost of maintaining IT systems used for payment security”.
@leoj_tweets Hi Joel, this fee is intended to aide, among other things, the recovery of some of the costs associated with processing… 1/4
— Virgin Australia (@VirginAustralia) August 25, 2016
But you’ll still pay at least 5% on taxi fares because the industry is regulated by state governments. On the upside, that’s half the 10% customers used to be charged until ride-sharing companies like Uber turned up and the rate was cut.
Sports fans and concert goers are also likely to benefit with major ticketing firms also subject to the ban, and online retailers have also been warned against any excess surcharges.
Companies that fail to comply with the new ban on excessive payment surcharging face penalties of up to $1.1 million.
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