More Aussie Retailers Plan Surcharges for Credit Card Payments

In news that should interest those in the U.S electronic transactions business who are contemplating the possible effects of regulation of card interchange pricing, a new study shows that an increasing number of merchants in Australia?which three years ago introduced regulation of the fees merchants pay acquirers on card payments–are planning to levy surcharges on credit card transactions. Among the 500 largest companies surveyed, 19.4% said they planned to surcharge within the next six months, up from 16.5% that reported such plans six months ago. Meanwhile, 16.6% of mid-size businesses said they planned to assess a surcharge, up from 12.2%, and 14% of small-to-medium businesses said they'd surcharge, up from 11.9%. The study, which covered 2,200 companies, was released by East and Partners, a research firm. No figures were immediately available on the amount of surcharge merchants were contemplating. When the Reserve Bank of Australia in 2003 ordered the bank card networks to chop interchange fees by some 45 basis points, to an average of 0.35%, it also freed merchants to assess surcharges on credit card transactions. As reported today in various Australian press accounts, regulators had not expected merchants to follow through with consumer charges, thinking this would drive away business. But now, these reports say, an increasing number of merchants see the levies as a revenue opportunity. At the same time, the Australian Consumers Association has reacted to the latest survey results by saying the increase in the number of merchants intending to surcharge exposes a “potential weakness” in regulators' efforts to control card pricing, according to these press accounts. The interchange regulation has already led to other consequences not necessarily foreseen three years ago, including increasing fees paid by cardholders to issuing banks. This additional levy had amounted to $139 million (U.S.) by late last summer (Digital Transactions News, Aug. 12, 2005). Close to 50 federal antitrust suits filed by U.S. retailers and retail associations against Visa, MasterCard, and major banks are in the process of being consolidated. They generally allege interchange is a result of anticompetitive price fixing by the bank card associations.