The new ban on excessive card surcharges has simply shifted the cost burden of card merchants from consumers to smaller businesses, a business analyst has claimed.
Michael Stafford of Perth-based 6seed said that while banning surcharges above and beyond the actual cost of transactions is welcomed to stop businesses profiteering, it does nothing to solve the “root cause” of the problem – i.e. the fact that such high fees exist at all.
“Consumers don’t like surcharges, hence this change. But why penalise business by forcing businesses to wear higher costs or increase their prices to bolster someone else’s profit?” he said.
“The decision to enforce the legislation from 1 September for all business will create new problems for consumers using credit, debit and prepaid cards, as the root cause has not been dealt with.”
Mr Stafford questioned whether the fees card merchants pass onto businesses really reflect the cost of processing these transactions.
“We live in the digital age, the cost of transactions is extremely low, that is one of the big benefits of the connectivity. Yet is it cheaper for a business to collect cash from customers, deposit this with their bank than it is to use an online payment system? Really?,” he asked pointedly.
“Debit card transaction fee[s are] 20 cents per transaction. Credit anywhere between 0.8 per cent to 2 per cent,” he said.
“Does it cost the EFTPOS organisation 20 cents to process an online payment? Are they that inefficient? [And] does it cost a credit card provider [say] 0.8 per cent to process payment online? This equates to 80 cents per $100 transaction.”
Mr Stafford added: “It is seriously hard to believe that the RBA and the ACCC allow such high charges on card transactions by the providers.”
He called on the Reserve Bank to investigate the actual cost to providers and make the results public in order to create transparency in the marketplace.
“Then the government can legislate,” he said.
The ban came into effect for all businesses regardless of size from 1 September 2017, having already been imposed on large businesses for 12 months prior.
As previously reported by My Business, there are substantial penalties in place for businesses found to have continued to impose ‘excessive’ surcharges beyond this date.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.