Ending the " Surcharge " Ripoff !

From yesterday it became illegal for a merchants accepting EFTPOS payments by way of a Debit card, or Visa, MasterCard or American Express credit card to charge any more than the cost the banks impose for that transaction.  That differs between individual banks, but the charges fall into the category of .05% for debit cards, 1 to 1.5% for Visa and MasterCard payments and between  2 and 3% for American Express.

The Australian  Competition and Consumer Commission has warned that breaches of the law will result in substantial first offence fines and the law will be diligently policed.   These surcharges have been the subject of constant complaints from card users with some merchants imposing a cost running into dollars for a service fee that cost them mere pennies.  It had become a hidden way of artificially adding a loading to the face value of the bill.

This legislation is long overdue. The " tap and pay " method applied to using mobile phones is fast decreasing the settling of small amounts with cash and there is the expectation that this will sharply increase in the future.   Cash is becoming a cost imposition on traders.  The reduction in bank branches has made banks reluctant to accept major cash deposits over the counter and many merchants are forced to have special service companies collect, count and deposit it - and that comes at a cost.

In particular, the increased use of debit cards has overwhelming advantage..  The money is instantaneously transferred from the bank account of the customer into the bank account of the merchants.  The trader is relieved of the danger of having tempting cash in the cash register to  attract bandits.  That is an advantage most thinking merchants would find attractive.

Paying taxi charges with a card and the use of cards in restaurants are notorious for card fee ripoffs.  The public should lodge a complaint if they find they have been charged an excessive fee for card use and there is the expectation that the offending merchants will be quickly brought to book.   There is also the expectation that this overcharge will be refunded.

There is another ripoff area that should be brought to the attention of the ACCC and that is the conditions imposed on gift certificates.  A gift certificate is simply a substitute for cash and its face value will be instantly refunded in cash when it is presented to the issuing company.  It was always open ended, but in recent years many issuing companies have imposed a time limit - usually twelve months validity.

Many gift certificates are never presented to a merchant and their value is not redeemed.  They are tucked away in a wallet and forgotten, or sometimes used to make a purchase which leaves an unspent balance.  This is a cash bonanza for the issuing company because they have received full payment in exchange for what had become a worthless piece of paper.

There are often limitations on the use of gift certificates.   Some merchants insist they can not be used for the purchase of items marked down at a sale price and must be used on full price items.  This is an artificial imposition that can be challenged at law, and it should be enforced by the ACCC.   In all respects, such gift certificates should have the same bearing as the presentations of banknotes.

The law change on card use surcharges is welcome.  Hopefully, similar legislation to cleanup the gift card disadvantages will quickly follow.