Shop carpeted over 12.5pc credit, fee

Written By Unknown on Sabtu, 20 April 2013 | 23.50

Matt Levey, head of Campaigns for Choice outside at Leichhardt Carpet Court where they are believed to be the biggest card surcharge in Australia, a whopping 12.5 per cent if you use Visa, Mastercard - or even more incredibly, eftpos . Picture: Nic Gibson Source: News Limited

Businesses will come clean about credit card surcharges. Source: Supplied

IS this the biggest credit card surcharge in Australia?

A carpet store in Sydney has been charging customers 12.5 per cent if they use Visa, Mastercard - and even eftpos.

But in a win for consumers, the impact of new limits on credit-card surcharges has finally begun to be felt with businesses forced to bring down fees.

On March 18, changes imposed by the Reserve Bank of Australia, which runs the payment system, took effect.

The new rules limit surcharges to the "reasonable cost of acceptance". The central bank made the changes because it was concerned about excessive surcharging.

Since then Visa has received more than 50 consumer complaints, which it is in the process of investigating.

Victories include putting an end to the biggest surcharge in the country - a 12.5 per cent fee for paying for carpet offcuts with plastic. And a consumer's complaint about a $63 fee on a tour booking led to the Sydney travel agent's 2.5 per cent surcharge being halved.

But some major merchants are still ripping off their customers.

Visa Australia head Vipin Kalra said fees of more than 1.2 per cent for paying with its card could no longer be justified.

"Anything over ... would be considered very excessive," Mr Kalra said.

The average Visa and Mastercard fee paid by merchants is 0.79 per cent; American Express is 1.81 per cent.

Under the RBA's "guidance note", the reasonable cost of acceptance can include some other expenses, such as fraud losses and IT expenses - but not staff time, which is what News Limited found a Sydney flooring shop was doing.

Both Visa and Mastercard forced Carpet Court Leichhardt to remove a 12.5 per cent "administration charge" on their cards after the fee was brought to their attention.

Owner Sandro Landini said the surcharge served mainly as "deterrent", was almost always waived and applied only to "remnant pieces". There was no charge on the "full service" side of his business.

While defending the charge, Mr Landini admitted he only paid a fee of 1 to 2 per cent to Visa and Mastercard before pointing to the time cost of accepting cards and cheques.

It required him to set up a customer account, write an invoice and do additional bookwork. He argued the cost of his time to do these things was part of his reasonable cost of acceptance. .

"Under the RBA's guidance note, that's just not going to cut it," said Choice Magazine's head of campaigns, Matt Levey, who has led the fight against excessive surcharges.

Mr Levey said that while the carpet store's fee was the biggest he knew of, airlines were still worse.

Lachlan Colquhoun, head of markets analysis at East & Partners - which does surcharge research for the RBA - said airline and ticket company surcharges were "almost outrageous".

No airline has taken any action to reduce their fees.

Jetstar was recently presented with a petition of 35,000 people fed up with its $8.50 "booking fee". It denies even having a credit card surcharge.

Mr Colquhoun said surcharges were now 1 per cent higher than the fee paid to Visa and Mastercard.

"Many retailer are now looking at those surcharges as part of their margin," Mr Colquhoun said. Jetstar and its parent, Qantas, have repeatedly denied making money from booking fees.

Got a news tip? Email John Rolfe


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