RBA crackdown on airlines' high credit card booking fees fails

AN RBA crackdown on airlines gouging customers hefty credit card surcharge fees has failed with consumers still being charged excessively.

A CRACKDOWN on airlines gouging customers with hefty credit card surcharge fees has failed to work with consumers still being charged excessive costs for paying by plastic.

The Reserve Bank of Australia introduced new rules last March limiting a merchant's surcharge to 'the reasonable cost of acceptance' in a bid to stop the exorbitant charges for using credit cards to pay.

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But almost 12 months on, latest analysis of surcharging costs by consumer watchdog Choice found only one of the major four domestic carriers had reduced its ticket surcharge for flight bookings.

Qantas last year dropped their credit card surcharge fee from $7.70 to $7 but the other domestic carriers have failed to budge.

Choice spokesman Matt Levey said the new rules had not been properly enforced and consumers were getting unfairly hit with hefty surcharges.

"The sky-high surcharges have been outraging consumers for years and it was great that the Reserve Bank stepped up and took action but no-one has been put in charge,'' he said.

"Now we have a rule with no-one to police it, no-one to enforce it.

"The big airlines have not moved once inch except Qantas moving its surcharge from $7.70 to $7.

"If you look at the costs to process a credit card which is less than one per cent and then you see surcharges in some cases close to 20 per cent, then it's obvious these fees are being used as a way to bolster profits."

Choice research compared the costs of a return flight from Sydney to Melbourne for one passenger and found Jetstar and Tiger charged customers $17 surcharges per customer to book flights.

But both airlines denied in issued statements that they have credit card surcharges.

A Tigerair spokeswoman said, "Tigerair doesn't have credit card fees, we have a booking fee."

An RBA inquiry into surcharging found in 2010 the average surcharge for MasterCard credit cards was 1.8 per cent, Visa was 1.9 per cent, American Express was 2.9 per cent and Diners Club was 4 per cent despite the average merchant service fee costing about 0.86 per cent.

An Australian Competition and Consumer Commission spokeswoman said they were concerned about whether there was enough transparency with surcharges.

"The ACCC is currently considering the issue of whether there is adequate disclosure of fees and charges in certain industries, with a view to assessing whether there might be implications under the Australian Consumer Law,'' she said.

"While businesses are free to set their prices, the ACCC's concern is to ensure pricing is communicated to consumers in a manner this is not misleading or deceptive either by the direct statements or implied representations.''

Small Business Minister Bruce Billson, who has responsibility for consumer and competition matters in the Abbott government, will meet tomorrow (MONDAY) with the Australian and Securities Investments Commission to discuss the problems relating to the enforcement of the rules.

Visa Australia's country manager Vipin Kalra said they had been working with financial institutions to try and stop excessive surcharging but there had failed to be enforcement of the rules.

"Visa has been actively working with merchants and financial institutions to reduce excessive surcharging,'' he said.

"Calculating the reasonable cost of acceptance is complex and there is no public enforcement mechanism to encourage change.

"We need enforcement by a public agency to reduce the current high levels of surcharging."

The Reserve Bank of Australia would not comment.