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Consumers are increasingly being slugged by card surcharges when shopping in person, adding further pressure to household finances at a time when inflation, while slowing, is still high.<\/p>\n
A recently released report by the Reserve Bank of Australia (RBA) shows 7.1 per cent of all in-person payments by credit cards and debit cards in 2022 attracted a card acceptance surcharge compared to 4 per cent in 2019 \u2013 a rise of 77.5 per cent. The typical surcharge in 2022 was 1.5 per cent across in-person and online card payments.<\/p>\n
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The likelihood of being hit with a surcharge when paying by credit or debit card in-person has risen sharply, but less of us say we care.<\/span>Credit: <\/span>Patrick Scala<\/cite><\/p>\n However, with a propensity to tap and go, and with cash almost disappearing, Australian consumers appear to have become more accustomed to paying surcharges. The RBA\u2019s survey of consumers that formed the basis of its report indicated fewer said they would avoid a merchant who applies a surcharge than in 2019.<\/p>\n The RBA estimates the average costs for Eftpos to be less than 0.5 per cent, Visa and Mastercard debit between 0.5 per cent and 1 per cent, and Visa and Mastercard credit between 1 per cent and 1.5 per cent. A surcharge, when it is charged, tends to be highest for rewards cards.<\/p>\n Figures from payments provider Tyro show it is smaller businesses that are increasingly using surcharging, particularly in the hospitality industry, with large businesses, such as supermarkets, tending to absorb the costs of card acceptance.<\/p>\n Data from June this year showed 40 per cent of cafes and restaurants levied surcharges in May, compared to 25 per cent in May 2022 when inflation started to rise. Just over 40 per cent of pubs and bars surcharged compared to 29 per cent a year earlier.<\/p>\n The figures from Tyro\u2019s more than 66,000 business customers show that the portion of fast food businesses surcharging increased to 26 per cent from 16 per cent over the same period.<\/p>\n Under rules set by the RBA and enforced by the Australian Competition and Consumer Commission (ACCC) merchants are supposed to only charge the actual costs they pay to the payment provider they use. Excessive payment surcharges are banned.<\/p>\n Some businesses charge a flat fee rather than a percentage surcharge, but even a flat fee should reflect the merchants\u2019 costs.<\/p>\n Merchants must display surcharges when there is no way to avoid them, such as paying cash, the ACCC says on its website. They should still display surcharges even if they take cash, the regulator says.<\/p>\n The ban on excessive payment surcharges does not apply to BPAY, PayPal, Diners Club, American Express cards issued directly by American Express, or taxi fares.<\/p>\n The RBA\u2019s report underlines the importance of using rewards cards strategically, says Sally Tindall, the head of research at comparison site RateCity.<\/p>\n \u201cIf a merchant is going to charge you more for paying with a rewards credit card, the cost of the surcharge could easily outweigh the value of the points you\u2019ll collect,\u201d she says.<\/p>\n \u201cWhen faced with a hefty surcharge for payment with a credit card, it\u2019s good to have a debit card on hand.\u201d<\/p>\n However, if the merchant charges a flat fee, regardless of how you pay electronically, then you may as well collect the reward points, she says.<\/p>\n The RBA\u2019s survey shows the percentage of card payment online attracting a surcharge, over the same period, declined slightly, from 9.2 per cent to 8.5 per cent.<\/p>\n In the last five years, the ACCC has imposed financial penalties on three companies for excessive payment surcharges \u2013 Fitness First Australia in 2018, Eurocar in 2019, and Nine Entertainment, the publisher of this masthead, in July 2021. No financial penalties have been imposed since.<\/p>\n Since 2018 it has been unlawful in the United Kingdom and the European Union for retailers to charge additional fees when a consumer uses a particular credit or debit card. The ban covers purchases online. The ban in the United Kingdom also includes other payment systems like PayPal.<\/p>\n