Credit Card Surcharges !

A lot of people will be cheering at the news that the Federal government will introduce legislation to outlaw merchants slapping an outlandish surcharge on goods or services paid for with a credit card.  In particular cost increases of between two and ten percent are commonly applied to airline fares, Taxi charges, hotel accommodation and the tickets for live shows.

This legislation will make it illegal to hike the price more  than the actual cost to the merchants -and in most cases this is mere pennies.  Unfortunately, in recent times the practice has been expanding as more industries use the pretext to attract custom by advertising very low prices and then hitting card users with this unexpected increase when they seek to pay the bill.

Economists may view this change with alarm because in most cases the surcharge will have been an integral part of the price structure for the industries using it - and the obvious response when it is banned is to hike the retail price to recover that same profit margin.  As a consequence, the price for those paying by credit card will remain about the same, but there will be a price increase for all those people who do not purchase on credit !

One of the things that induced the government to act on these surcharges is a growing practice to slap a hefty surcharge on all forms of "card " payments, and slowly that has increasingly been applied to debit cards.   Debit cards are a relatively new innovation and they simply effect a money transfer from the customers bank account to that of the merchant.  In their more recent form they do not require either use of a PIN or a signature.  Simply tapping the embedded icon on the card against the terminal on the merchants counter will transfer funds below a hundred dollars without further action.

Some noted economists have been seriously  suggesting the total discontinuation of banknotes and coin money.   The technology of debit cards and smartphones and the apps that apply to them are bringing some form of "swipe " payment close to becoming a reality.   From the point of view of the taxation office this would wipe out the "cash economy " of tax avoidance because all and every transaction would leave an electronic record.

We have come a long way since the days when the banks opened at ten in the morning and closed at three in the afternoon - on the dot !    The introduction of ATM's brought in the age of twenty-four hour seven day banking and the credit card virtually killed the cheque book form of payment for most people. Credit for ordinary people first made it's appearance when the big four Australian banks simply mailed out their new "Bankcard " system cards to customers on their books.  Initially, it was only usable within Australia, but very quickly the International card system brought the ubiquitous "Visa " or "Mastercard " logo onto the cards - and they were accepted world wide.

Eliminating these credit card surcharges will certainly decrease price shock at the point of payment but it needs to go hand in hand with truth in advertising.  The words " Conditions Apply " can cover a multitude of sins and very often the price advertised is far lower than the price that eventually appears on the sales docket.