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Australian Retailers Association warns of credit card surcharge regulation

The Australian Retailers Association is fighting for retailers’ rights to apply surcharges on credit card transactions to preserve the effective “users-pay” system and to prevent surcharge regulations from  increasing costs for customers.

"Good retailers understand that they must consider their customers' experience when deciding whether or not to directly charge for credit card usage and the majority won't overcharge or charge at all," Russell Zimmerman, the ARA executive director, said, according to SmartCompany.com.

The ARA is teaming with the Australian Merchant Payments Forum to provide a submission to the Reserve Bank of Australia on the prospect of re-regulating credit card surcharging.

"If charges for using credit cards are deemed unacceptable by consumers, this will affect the individual retailer's bottom line," Zimmerman said, SmartCompany.com reports.

Zimmerman said charging directly for credit card usage creates a user-pay system that allows customers to make an informed decision about the means of payment that represents the best value for them because businesses have to disclose the amount of credit card fees that will apply before they enter into the transaction.

The Reserve Bank recently observed that some charges were “well in excess of card acceptance cost” and that surcharges can account for up to four percent of a transaction.

"There may be a case for varying the standards to allow the scheme to place some limits on the level of surcharges," the central bank said, according to SmartCompany.com.

Financial experts argue whether or not small businesses are taking advantages of customers through credit card surcharges.

Peter Strong, the executive director of the Council of Small Business Organisations of Australia, said that there's no evidence that small business is ripping off customers, according to SmartCompany.com.

Paul Dowling, the principal analyst at East & Partners, said that merchants have become "more aggressive" and generated fees that are beyond the cost of recovery, SmartCompany.com reports.

Dowling added that online merchants usually have higher credit card surcharges than high street merchants.

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