Australian consumers getting stung with unnecessary surcharges

Australian shoppers are unnecessarily getting charged fees for tapping their card at the checkout despite costs coming down. ARE YOU GETTING STUNG? HAVE YOUR SAY

Exclusive: Mean spirited retailers are failing to pass a reduction in credit card fees to customers.

MasterCard and Visa as recently as last month slashed the amount they charge retailers to use credit and debit cards.

But customers are yet to reap the benefits.

It comes after News Corp Australia revealed last week Australians some shops are charging as much as 1.75 per cent extra on every transaction – the equivalent of 6c for a $3.50 cup of coffee of 43c for a $25 meal.

The latest findings revealed customers are needlessly paying extra on every credit and debit transaction.

Choice spokeswoman Erin Turner called for the reductions to be passed on as soon as possible.

Increasing use of cards for purchases for everything from coffees to airfares added to the urgency, she said.

“With MasterCard and Visa dropping some back-end card costs, we should see some lower surcharges,” Ms Turner said.

“This may take time to take effect as banks have to provide clear guidance to businesses about what a reasonable surcharge is in their situation.”

Mastercard confirmed in the last 18 months it reduced the amount it charges retailers to use it service from 12c a transaction to just 4c.

Visa last month reduced its charges from 8c a transaction to only 5c.

But many retailers continue to charge customers a percentage of their purchase to cover processing costs.

The fees typically range from 0.5 per cent to 3 per cent.

Shoppers are being charged high costs to pay by card despite Visa and Mastercard reducing their charges.

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Australian Retailers Association executive director Russell Zimmerman defended shop owners, saying they also had to recoup other charges for providing card services.

“There’s a scheme fee that are being charged to merchants and that’s why merchants haven’t dropped their fees,” he said.

It is also understood the fees banks charge retailers has also fallen.

Mastercard division president for Australasia Richard Wormald said the card provider had for years been bringing down the costs of payments.

“We have the lowest cost form of payment for debit cards,” he said.

The Australian Competition and Consumer Commission two years ago banned businesses from charging consumers excessive surcharges for using EFTPOS, Mastercard, Visa and American Express.

Retailers must also tell customers what surcharges they will incur for using credit or debit cards under the changes.

New “tap and go” technology is fuelling use of cards, especially for smaller purchases, as consumers continue to shun cash.

There are an estimated 15.7 million credit cards and 38.5 million debit cards in circulation nationwide.

The competition and consumer commission advises it costs retailers as little as 0.5 per cent of a purchase to cover the cost of accepting debit cards, 1-1.5 per cent for most credit cards and 1.5-2 per cent for American Express.

@sophieelsworth

Originally published as Australian consumers getting stung with unnecessary surcharges