The Turnbull government will declare war on credit card surcharges in the next financial year. Discover how you’ll cut your credit card costs here.
As of July 2016, surplus surcharges will be a thing of the past. On October 20 2015, the Turnbull government announced that merchants will be banned from charging surcharges for credit and debit cards that exceed the cost of processing them in the new financial year. The Turnbull government announced the introduction of a three-tier system of surcharging, which will include a total ban on surcharges for debit cards and a restriction on levies for Visa and MasterCard.
How much have I have been paying in surcharges?
The cost of processing a payment is approximately 0.5%. Currently, most merchants charge at least twice this amount, with some levying up to 20 times higher. In 2015, MasterCard revealed that Australians fork out about $1.6 billion a year in surcharges alone. One particular source of complaint has been the fees charged by airlines, which are routinely above $7 per seat for credit card bookings.
What’s the government’s plan?
The decision was prompted by the Murray inquiry, with more than 5,000 of the final 6,500 submissions challenging surcharging. Treasurer Scott Morrison labelled the surcharge veto as a “fair dinkum test” and Prime Minister Malcolm Turnbull agreed that the topic has been a cause for customer concern for some time.
"We think that consumers are entitled to a very fair deal here and in other words, to get exactly what they are being represented to be getting, which is an additional charge that recovers no more than the merchant's costs," Mr Turnbull said.
The government will assign the task to the Payments System Board, who will determine what is considered an excessive surcharge and a review of the interchange fees applies between the banks in a report due by March 2016.
How can I avoid surcharges?
While this strategy will help cardholders save in the next new year, how can you avoid credit card surcharges between now and next July? Here are a few handy hints to evade those pesky fees while they’re still around:
- A dual-card account. Some providers offer credit card accounts that come with two cards, such as an American Express and either a MasterCard or Visa. So if you’re making a purchase at a merchant that has a surcharge on Visa but not on American Express, you can use the AMEX to avoid the charge.
- POLi. A subsidiary of Australia Post, POLi is one of Australia’s more competitive real-time online debit payment methods. With internet banking enabled on your credit card, you can nominate to pay using POLi to avoid surcharges.
- PayPal. Similar to POLi, you can link your credit card account to PayPal to make online payments. Many merchants don’t apply a surcharge on PayPal transactions, so this is another way you can avoid such charges.Tips on avoiding credit card surcharges
The Turnbull government’s decision to overturn excessive credit card surcharges could cut your costs significantly in the new financial year. Until then, use our easy tips to avoid credit card surcharges until July 2016 rolls in.