Sydney council slugs ratepayers up to $1 million to pay by credit card

RATEPAYERS in one Sydney shire have been slugged up to $1 million to pay their rates. Is it time to tell the rip-off merchants we’ve had enough?

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THEY go up almost every year, and no one likes paying them — so when a Sydney council added a $27.34 credit card surcharge to its rates bill, the response was never going to be positive.

Sydney woman Sharon Shaw was shocked when she was confronted with the hefty surcharge, levied on top of her $1367.22 in annual rates, when she tried to pay online.

“I nearly fell over when I saw it,” Ms Shaw told news.com.au.

It’s just one example of the hundreds of millions of dollars in credit card surcharges Australians are slugged with each year — but a long-awaited crackdown is looming.

The Reserve Bank of Australia’s credit card reforms, due to be announced in coming months, couldn’t come any sooner for Ms Shaw, who opted to pay with plastic after a number of expenses came up at once.

“I was going to pay the quarter, but then when I went to pay, it came up with a $6.50 surcharge. I thought, if I’m going to have to pay that, I might as well fix up the whole year,” she said.

She then noticed the warning on the payment screen that a 2 per cent surcharge would apply. When it was calculated against her yearly rates, the amount “blew me away”.

“I don’t usually pay my rates on my credit card, but in this instance I had all my bills come at once and my partner and I have a holiday coming up,” Ms Shaw said.

“But some people are really doing it tough and paying on credit may be their only option.”

A spokeswoman for the local government in question, Hills Shire Council in Sydney’s northwest, said the $27.34 surcharge was split between the council and Westpac Bank, which provided the online payment terminal. Spokeswoman Stephanie Loobeek said the council and the bank each charged 1 per cent of the total bill. Ms Loobeek did not reveal the cost to the council of processing credit cards, but the average amount charged by banks is 0.5 per cent.

Klaus Bartosch’s online petition to stop Jetstar from gouging travellers who pay by credit card has more than 100,000 signatures.

The extra 1.5 per cent adds up to more than $1 million across the shire, which has about 60,000 dwellings.

Ms Loobeek said residents had a choice as to whether they wanted to pay via credit card.

“(They) are also warned before they make payment in this form of the 2 per cent surcharge before they submit their payment.”

The double whammy pushes the surcharge well beyond the cost of processing a credit card payment, a despised revenue-raising practice used by airlines, event booking sites and taxis. The surcharges have persisted despite years of consumer lobbing.

Ms Shaw said the council’s new paperless billing system gave the impression that an online credit card payment was the preferred option. While residents can pay by phone, cheque, money order, Australia Post, BPAY or in person (any of which still attract a $13.67 surcharge if a credit card was used), the most intuitive option was to click “pay now”.

One thing is sure: Australians are fed up with being hit with fees that bear no relationship to the cost of processing their payments for goods and services.

For years, consumer advocates have called for the “ridiculous” surcharges on flights, concert tickets and taxi fares to be capped.

Gold Coast man Klaus Bartosch has called on Treasurer Joe Hockey to ban credit card surcharges outright, and his petition calling on Jetstar to drop its $8.50 online booking fee attracted more than 100,000 signatures.

Consumer advocate Choice estimates that Australians fork out about $800 million in credit card surcharges each year, most of it to airlines, which offer no other convenient method of payment.

A Choice investigation established that airline mark-ups on the cost of processing payments were as high as 2670 per cent.

Now hopes are hanging on impending reforms by the Reserve Bank, which will set new rules for credit card fees in Australia.

The Reserve Bank’s Payments System Board is set to reveal the new rules within months, with potential changes to include capped “interchange fees”, the levy banks charge each other, which is passed onto customers and then some.

RBA Governor Glenn Stevens said in May that Australians were still being slugged with “excessive” surcharges.

“The card payments review is looking at several possible mechanisms for addressing this,” he said.

The RBA review was launched in response to David Murray’s Financial System Inquiry last year, which recommended capping the amount banks could charge merchants and dramatically lowering the cost of paying by EFTPOS or debit card.

News.com.au has sought comment from Westpac.

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