MasterCard to cause stink over excessive card surcharges

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MasterCard to cause stink over excessive card surcharges

Restaurants, clubs, retailers and anyone accepting credit cards might well heed this warning by MasterCard.

If you are accepting credit cards from your customers, you might be interested in an announcement by MasterCard that it is going to “monitor and enforce” a ban on adding an excessive surcharges.

The card company has jumped on changes in rules designed to stop businesses profiting by adding unreasonable surcharges on the bill when customers pay by card.

“To describe this as a win for consumers is really an understatement. Here in Australia, MasterCard has long argued that, to the extent surcharging is allowed, it should only be allowed up to a level that reflects the merchant’s cost of accepting that card,”  MasterCard Vice President of Strategy and Corporate Affairs David Masters said.

Adding a surcharge will still be allowed under the new rules, but only to cover the “reasonable” cost of accepting the card - which can include things like card terminal rental, gateway fees and line rental for card terminals.

What constitutes “reasonable” costs is still something that’s open to debate. The Reserve Bank of Australia (RBA), who last year announced the changes, why they’re being made, the history of the issue, and the concerns raised by different parties, is inviting comment on what should be accepted as reasonable costs. Its draft “guidance” indicates that businesses should be able to include the merchant service fee, but also other costs, when calculating a surcharge. You can read the draft here.

If you want to have your opinion heard, the RBA on its Web site states you can contact:

Payments Policy Department by July 20 at:
Head of Payments Policy Department
Reserve Bank of Australia
GPO Box 3947
SYDNEY NSW 2001

Or email: pysubmissions@rba.gov.au

A ban on surcharges was removed in 2003 for Visa and MasterCard payments. Since then the RBA states it has received concerns, as well as performed data collection, indicating that some businesses are adding surcharges that exceed the cost of accepting a card payment.

The RBA has pointed to restaurants, retail, taxis, rental and entertainment among other industries where it alleges high surcharging is common.

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