Australia, often used as the model for interchange regulation, is apparently having second thoughts regarding the structure of its regulations. The Reserve Bank of Australia, having previously allowed merchant surcharging for credit card acceptance, is considering rules permitting card networks to place a cap on surcharges. The main concerns appear to be excessive surcharges with online merchants and with large merchants.
The average surcharge for online purchases was also higher – around 4 per cent compared to about 2 per cent for in-person transactions, according to data from East & Partners cited by the RBA.
The Reserve also notes consumer group concerns that some retailers are now charging fees well in excess of the costs they pay to the credit card companies.
Figures cited in the RBA’s preliminary report show the average surcharge is now around 2.5 per cent of the transaction value, while the average merchant service fee charged by the card companies has fallen to just under 1.5 per cent for large businesses and just under 2 per cent for small businesses.
The RBA is particularly concerned about some industries, particularly those with online purchasing, that are exploiting the lack of practical payment alternatives to credit cards to increase surcharges.
Rules being considered would potentially limit the amount of surcharging to the cost of recovering card acceptance fees.
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