Over the past few decades, Australian consumers have increasingly been making payments electronically, particularly by using debit and credit cards, says the Reserve Bank of Australia. Unfortunately, those transactions have come at a high cost for both consumers and retailers.
Indeed, consumers tend to spend more when paying by cashless means. But that’s not all, there are also hidden costs. In fact, around 3.5% of all card transactions were surcharged in 2016, amounting to an estimated few hundred million dollars a year.
According to the RBA, merchants pay around $4 billion in service fees to banks and card issuers a year. It’s to alleviate these costs that some retailers charge additional fees to customers. In 2016, the ACCC set an amendment to ban excessive A transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More surcharges, restraining businesses from charging more than what it costs them to process the transaction. On average, consumers are charged 1% per transaction, but it can go up to 3%, the most expensive payment methods being credit cards and those providing rewards.
Adepts of online shopping are more likely to be impacted and if you like travelling, be aware that the airline and hospitality industries often follow such practices. You may also encounter these surcharges when paying domestic bills or for transportation, including taxis.
Fortunately, you can avoid additional fees by using Money in physical form such as banknotes and coins. More, and some retailers don’t charge for the use of debit cards either. When paying online, activation of the BPAY option will prevent you from paying surcharges. There are also supermarkets that don’t charge these costs, like Coles or Woolworths.
Although these fees turn out to be onerous, Philip Lowe, Governor of the See Central bank. More, assured that “as we move to a predominantly electronic world, the cost of electronic payments will decline ”. A statement that not only sheds a lot of doubt, but also comes without guarantees as a completely cashless society would be orphan of alternative payments’ main competitor – cash – leaving card issuing companies free to increase rates as they please.