The RBA is banning fixed-dollar surcharges for credit cards
Big businesses like Qantas and Virgin will no longer be able to charge excessive surcharges following the Reserve Bank's fixed-dollar ban.
You’ll no longer be hit with excessive surcharges when using your credit card to make payments following the Reserve Bank's introduction of a fixed-dollar ban today. Following almost a decade of Senate inquiries and debates, credit card surcharges will be limited to the cost of processing the payment and not a cent more as of 1 September 2016.
The RBA’s decision means that businesses with revenue over $25 million or with 50 or more employees (such as airlines and ticketing companies), will no longer be able to charge flat-rate surcharges come spring.
This means significant savings for credit card users, especially when using their cards to book flights with the likes of Qantas and Virgin. Qantas customers are currently charged surcharges of $7 per passenger for Australian and Trans-Tasman flights and $30 for international trips. Virgin charges $7.70 per passenger for domestic flights and $30 for overseas trips.
In this instance, Qantas’ surcharge is currently 383% larger than the cost it actually takes to process your payment. In recent years, some Aussie businesses have charged customers with flat fees of up to 1,000% of the cost of processing payments.
The RBA’s decision follows the Competition and Consumer Amendment (payment surcharges) Bill 2015 that was passed by the Senate in February this year, which gave the Australian Competition and Consumer Commission (ACCC) the power to penalise institutions charging excessive surcharges for card payments.
As of September, if a business is caught charging a surcharge above the processing cost, they’ll be slammed with a whopping unfair and infringement notice of up $108,000. These standards will also be implemented for small businesses as of 1 September 2017.