From taxi fares to restaurant bills, paying extra by credit card can be a sour note for customers. But small businesses shouldn't be the ones copping flak, argues an industry group.
The Victorian Employers' Chamber of Commerce and Industry (VECCI) says small businesses shouldn't be blamed for passing on the costs of accepting payment by card.
Rule changes by the Reserve Bank of Australia allow credit card companies to limit card transaction surcharges applied by merchants to the actual cost of the transaction. Visa was the first to apply the new rule.
But VECCI chief economist Steven Wojtkiw says that while any surcharge must be limited to the reasonable cost of card acceptance, that can include many different fees and charges.
"Consumers must realise that businesses can’t be expected to absorb the full cost of card transaction fees. These are charges imposed upon retailers by card companies, with small businesses generally charged a higher percentage merchant fee than their larger counterparts. The annual cost of this must be accounted for somewhere. Small businesses cannot afford to continue to meet rising fee demands without passing some costs on to consumers," he said in a statement.
Wojtkiw suggests small businesses will be doing the right thing if they apply a surcharge that reflects the cost of card acceptance and provide adequate disclosure.
In any case, it is up to card companies such as Visa to enforce the new rule, which some businesses are said to be attempting avoiding the rule change by (re)defining surcharges as 'service fees' or similar.
Some small businesses accept Visa and Mastercard at no extra cost because of their lower fees, while surcharging American Express and Diners Club which charge merchants approximately twice as much as the two main card companies.
A relatively small proportion of mostly low-margin businesses (notable examples include small IT retailers and the Aldi supermarket chain) surcharge all credit card transactions, while some small businesses including some cafes and hairdressers do not accept credit cards at all.