RBA imposes limits on excessive surcharges

visa, mastercard, credit card, amexShoppers will no longer be slugged with excessive surcharges on credit card payments under new rules set out by the Reserve Bank.

From September 1, surcharges will be limited to the amount it costs the retailer to accept a card for a transaction.

“Merchants will not be able to impose high fixed-amount surcharges on low-value transactions, as has been typical for airlines,” the RBA said on Thursday.

The new rules will apply to large merchants from September 1, and to smaller merchants from September 1, 2017.

They will put a cap on the interchange fees paid by merchants to the card issuer, which the RBA hopes will in turn reduce overall costs for consumers.

For debit cards, this cap has been reduced to eight cents from 12 cents, while for credit cards it has been put at 0.8 per cent of the transaction.

“The new provisions will limit the amount businesses can surcharge customers for use of payment methods such as most credit and debit cards,” Australian Competition and Consumer Commission chairman Rod Sims said.

Earlier this week, a host of retailers launched a surcharge free movement, in a bid to scrap all charges incurred at the cash register.

Surcharge Free is a national movement made up of Australian retailers and business associations, including the National Retail Association, online retailer The Iconic, Coco Republic, and The Retail Doctor Group – urging businesses across the country to end payment surcharges.

The campaign is being spearheaded by consumer advocate and campaigner, Christopher Zinn and aims to raise national awareness of the positive impact that not surcharging payments has on businesses.

“While today’s announcement following the RBA’s review of card payments regulation addresses excessive surcharges in many large industries, uncertainties remain around surcharging card payments for smaller everyday consumer purchases,” said Zinn. “Additionally, the RBA guidelines do not engage with consumers’ negative feelings toward surcharging or the detrimental impact the practice can have on customer loyalty and advocacy for businesses of all sizes.”

“Surcharge Free is a new movement that’s launched this week to encourage merchants across Australia to focus on the bigger picture and go a step further than the RBA guidelines by ending payment surcharges altogether. As we’ve seen, businesses of all shapes and sizes are benefitting from their decision to not surcharge customers, and with the cost of acceptance being reduced the rewards will only increase.”

Read more about the new movement as Inside Retail talks with Darron Kupshik COO and CFO at Global Retail Brands, owner of the House and Robins Kitchen chains; and consumer advocate, Christopher Zinn.

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