Excessive Visa Surcharges Banned

Retailers banned from surcharging customers who pay with Visa card, in-store and online from today.

The change applies to both Visa credit or debit card.

AMEX, MasterCard, Diners and JCB have not yet made any decision to participate in the surcharge limiting rules.

The new rules were developed following a review of card surcharging practices by the Reserve Bank, and is aimed at better protecting consumers from excessive surcharging and provide more transparency for consumers.

“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,” said Visa’s Country Manager for Australia, Vipin Kalra.

CN contacted several Aussie retailers about the changes and are awaiting a reply.

But its not just retailers – taxis, ticket outlets and airlines in particular charge massive credit card fees – Virgin Airlines for instance charges $7.00 on each credit card transaction.

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 card payment.

Stores will have to justify any surcharges they pass on to consumers, whichcan be made up by the Merchant Service Fee (MSF), terminal line cost, credit card terminal rental, annual acceptance fee and employee training.

“This is good news for consumers and should mean the practice is more transparent,” said Kalra.

The majority of surcharges on Visa cards should be close to the merchant service fee charged to the merchant by their bank, which is on average is 0.85 percent.

“Visa is a lower-cost card, so we would expect retailers to take that into consideration in their surcharging rates,” he said. The card giant 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.

Visa said it will work with financial institutions to monitor retailer compliance and 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.

Card fees sometimes are as high as 3% retailers cannot take the service fee of the highest cost scheme and apply that charge across Visa, so if the MSF for AMEX is 2.5% and for Visa is 1%, they must charge a different surcharge for the two transaction types

If consumers suspect a retailer is charging an unreasonable surcharge, you can email Visa at surchargingfeedback@visa.com