Ebates Announces New Mobile App for Cash Back Shopping on Android

by Pradeep T Moudgal 0

Based on its review of merchant credit card surcharge practices, the Australian Reserve Board has signaled its intention to rein in the practice by requiring surcharges be aligned with merchant costs.

The board frequently cited in its decision cab drivers who add a 10 percent-surcharge to fares paid with credit cards. An article from the Australian press goes on to report approximately 36% of merchants in Australia currently add a surcharge to credit card purchases. With the new guidelines going into effect this week, Visa has clearly stated it will limit such charges to around 1% of the transaction amount. American Express also stated it intends to make certain any such charges are aligned with the cost of acceptance. MasterCard has yet to comment on the decision.

Credit card surcharges have only recently been allowed here in the United States, based on the recent interchange-fee lawsuit settlement preliminarily approved by the New York courts in 2012. At the time, merchants were quick to proclaim their aversion to adding additional fees to card payments. These same merchants, however, have the ability to negotiate more favorable interchange fee rates in lieu of surcharges, which might negatively impact issuer interchange fee revenue, but will protect consumers from facing higher fees and potentially selecting a lower cost of form of payment.

From The Age:

If MasterCard, AMEX and Diners Club follow Visa’s suit it would save Australian consumers an estimated $350 million a year based on spending on card transactions last year, Mr Stollmann said.

If the Australian payments market is any example, then we would expect to see surcharges here in the T&E industry, although unlike the original AU regulations, the New York court settlement established a 4% ceiling on an surcharges. Regardless of any surcharge-fee ceiling, surcharges tend to have a negative impact overall on the electronic payments market and in our opinion, don’t present a sustainable solution to the thorny problem of economic balance in the payment transaction cycle.

Click here to read more from The Age.