Overview

Fair Trading commissioned Choice to prepare a comprehensive report on credit card surcharges in Australia because of widespread concern in the community about surcharges and the perception that many of them appear to be excessive.

While surcharges are not a matter for state governments to legislate, the level of concern prompted the need for sound research to better inform policy decisions and developments.

Over 1,400 people were surveyed on their experiences with credit card surcharges and an additional 140 people were asked to keep a 'credit card diary' for two weeks, documenting their retail transaction and noting whether surcharges were disclosed for using particular credit or debit cards.

Main research findings

The main findings of the research are:

• Widespread diasapproval of and opposition to surcharges. 68% of survey respondents believe that retailers and other businesses should not be allowed to charge customers extra when they pay with their credit card.
• People do not understand the reason for the surcharges and the benefits have not been properly explained.
• Industries where credit card surcharges were most often experienced were in air travel, telecommunications, holiday travel, restaurants, utilities, taxis and petrol stations.
• There is a need for retailers to fully disclose their surcharges upfront.
• It is very difficult for consumers to know if the surcharges are fair and reasonable.
• Even the credit card companies themselves believe that some merchants are surcharging over and above the cost of accepting a credit card.

Tips for consumers

To lower transaction fees, help retailers reduce their costs, and support the uptake of efficient and innovative payment systems consumers can:

• ask how to avoid surcharges
• compare surcharges across the different payment cards
• report non-disclosure by retailers to ASIC
• help retailers to reduce their costs by choosing the most efficient payment method
• use EFTPOS and other debit cards
• question the value of rewards cards
• find a better value credit card
• pay lower bank fees.

The report

The report can be accessed in two parts:

Credit card surcharging in Australia - Part 1 (PDF size: 1.4mb)
Credit card surcharging in Australia - Part 2 (PDF size: 604kb)

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