The Federal Senate recently passed legislation banning “excessive surcharging” for credit card purchases. It’s hoped the new laws, that will fine offending businesses up to $108,000 for each offence, will help reduce the amount Australians pay in credit card surcharges every year. However, sceptics worry the legislation may actually encourage more companies to charge for credit card use.
Consumer advocates have spent years lobbying for this legislation, which will come into effect later this year, as they say the fees can be significantly greater than the actual cost of processing a credit card payment. For example, Choice says Jetstar charges $8.50 on an $85 fare, when the actually processing costs are believed to be just 66 cents.
But Queensland businessman Klaus Bartosch, whose Change.org petition called for the surcharges to be banned altogether, said he worried the new laws would encourage more businesses to add credit card transaction fees.
“There’s been uncertainty around whether or not surcharges are legal. And retailers have been confused about whether they’re allowed to do it,” he told news.com.au.
“Now that uncertainty has gone away and they can have a free for all … I’m guessing the government feels that competition among businesses will prevent it, but retailers are under pressure. If they can impose a credit card surcharge, they will.”
A 2014 MasterCard study showed Australians pay approximately $1.6 billion in surcharges every year. Mr Bartosch estimates this amount could jump to up to $7 billion with the new legislation. That could have a significant impact on the debt levels of all regular credit card users.
It’s uncertain at this point how the Reserve Bank of Australia will define “excessive” credit card surcharges.
If Mr Bartosch’s predictions are right, it seems the new legislation could make using credit cards more expensive than ever. Taking preventative action now is the best way to ensure you don’t plunge deeper into debt when the legislation’s introduces. Contact Chase Edwards on 1300 854 833 to learn how we can help you pay off your credit card debt and start avoiding those sneaky surcharges.