Credit card surcharges and non-transparent transaction fees: A study

The CCAAC study into the experiences of Australian consumers when they encounter credit card surcharges and transaction fees was released.

Downloads

CCAAC Report – Credit card surcharges and non-transparent transaction fees: A study [PDF 969 KB]

CCAAC Report – Credit card surcharges and non-transparent transaction fees: A study [DOCX 428 KB]

Background

Credit card surcharges and transaction fees are generally not specific to particular goods or services supplied by merchants, but instead relate to the cost of accepting credit cards or administrative costs.

The Reserve Bank of Australia is responsible for payment systems, and has agreements in place with credit card schemes regarding credit card surcharges.

The Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) are responsible for administering the consumer protection provisions of the Australian Securities and Investments Commission Act 2001 and the Australian Consumer Law.

ASIC has particular responsibility for financial services, including where claims made about credit card surcharges are false or misleading.  The ACCC has broader responsibility for the conduct of suppliers, including in relation to surcharges or fees that do not relate to payment systems and whether the use of such surcharges or fees may mislead or deceive consumers regarding the total price of goods or services.

Terms of Reference

Consumer stakeholders have raised concerns about credit card surcharges and non-transparent transaction fees, particularly the extent to which they:

  • hide the true cost of goods and services where a surcharge or fee is a significant amount of the total cost;
  • are inadequately disclosed, including where they are only revealed at the point of payment; and
  • are levied in circumstances where there are no practical alternative payment options.

Consumers are afforded protections aimed at ensuring transparency in the display of prices for goods and services.  This includes the general prohibition against misleading and deceptive conduct and the single price provision of the Australian Consumer Law (which forms Schedule 2 of the Competition and Consumer Act 2010), and the mirror protections under the Australian Securities and Investments Commission Act 2001.  There are also standards that promote efficiency and competition in the Australian payments system, including the recently amended surcharging standards made under the Payment Systems (Regulation) Act 1998, that allow card scheme rules to limit surcharges to the reasonable cost of card acceptance.

CCAAC is requested to commence a study into the experiences of Australian consumers when they encounter credit card surcharges and non-transparent transaction fees.  CCAAC is also requested to provide advice as to the prevalence of merchants applying surcharges or fees that appear excessive and where they hide the true cost of goods and services where a surcharge or fee is a significant amount of the total cost.  As part of this study, CCAAC should:

  • investigate consumer experiences with credit card surcharges or transaction fees, including where consumers could be misled about the true cost of a good or service;
  • examine the obligations of merchants when applying credit card surcharges or transaction fees, including how these obligations are enforced; and
  • identify best practices to improve the transparency of credit card surcharges or transaction fees, including the use of consistent terminology and disclosure practices.

CCAAC is asked to provide its report to the Assistant Treasurer by the end of July 2013.

Submissions

Submissions were requested by 21 June 2013.  CCAAC has received 12 non-confidential submissions to this study.

Abacus-Australian Mutuals [PDF 64 KB]
Accommodation Association of Australia [PDF 776 KB]
American Express [PDF 837 KB]
Australian Hotels Association [PDF 125 KB]
Australian Payments Clearing Association [PDF 91 KB]
Cabfare (National Billing Group) [PDF 668 KB]
Commonwealth Bank [PDF 514 KB]
Consumer Action Law Centre [PDF 152 KB]