New rules to limit card surcharging come into effect next week
Australia - Surcharging is set to come under the consumer spotlight next week, when card schemes introduce new rules aimed at limiting the fees retailers can charge their customers for paying with a credit or debit card.
Visa’s Country Manager for Australia, Vipin Kalra, said the new rules, which come into effect from Monday, March 18, were developed in response to a Reserve Bank of Australia (RBA) review, aimed at better protecting consumers from excessive surcharging.
“From next week, retailers will need to review their surcharging practices to make sure their surcharges are not excessive and that they are clearly disclosed upfront to customers, both in-store and online,” Mr Kalra said.
“This is good news for consumers and should mean the practice is more transparent.”
Visa’s new rules follow regulatory changes announced by the RBA last year, which allow card schemes to limit surcharges to the “reasonable cost of acceptance” – or how much it costs retailers to accept a payment card.
Mr Kalra said the majority of surcharges on Visa cards should be close to the merchant service fee charged to the merchant by their bank. RBA data shows the average merchant service fee on Visa is 0.85 percent - less than half the average cost of American Express and Diners Club.
“Visa is a lower-cost card, so we would expect retailers to take that into consideration in their surcharging rates,” he said.
Visa has developed a program to help retailers to comply with the new rules. This includes a special calculator, available through the retailers’ banks, to assist retailers determine their “reasonable cost of acceptance” as defined by the RBA.
The surcharging rules have been included in Visa’s international operating regulations applicable to Australia, and Visa will work with financial institutions to monitor retailer compliance. The rules provide a process for retailers to verify their cost of acceptance and some large retailers will be required to engage an independent audit firm to validate the data.
Mr Kalra said retailers found to be surcharging excessively will be notified by their bank of their non-compliance.
“It will take a little time for retailers to review the new rules and implement them. We will monitor the situation closely to see what effect the changes have on surcharging levels,” he said.
“We hope retailers that surcharge will consider the customer experience. Retailers benefit from a global cardholder base, access to new sales channels and a guaranteed, fast, efficient and secure payment experience when consumers choose to pay with a card, so we hope they take these factors into consideration in their surcharging decisions,” he added.
Some key principles included in Visa’s new surcharging rules:
• The surcharge must not exceed a retailers’ “reasonable cost of acceptance” under RBA guidelines
• Retailers must prominently disclose their surcharge rate or amount to customers at point of sale and online before the purchase is made
• Consumers who receive a refund on a purchase also have the right to receive a refund of the surcharge amount
• Retailers may be required to complete a review process managed by their acquirer to assess their “reasonable cost of card acceptance” and whether it complies with RBA guidelines.
For more information on the new surcharging rules visit here.
Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world’s most advanced payment processing networks - VisaNet - that is capable of handling more than 24,000 transaction messages a second, with fraud protections for consumers and assured payment for merchants for properly authorized transactions. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, ahead of time with prepaid or later with credit. For more information, visit corporate.visa.com. Corp