A Government bid to ensure excessive credit surcharging is legislated has been welcomed by retailers.
The Australian Retailers Association (ARA) said retailers support the Federal Government’s Financial System Inquiry (FSI) recommendations.
These include a cease on exorbitant merchant fees by unregulated payment systems through regulation.
ARA executive director Russell Zimmerman said the recommendation will benefit both retailers and consumers.
He said it will allow retailers to reduce surcharging on high cost payment systems.
The ARA believes there are flaws in the current system, the biggest of which being the lack of regulation of the plethora of high cost and new payment systems coming into the market.
American Express co-branded cards, Diners Club, China Union Pay, and Bitcoin, are not regulated, and all carry greater costs for retailers and consumers alike.
It costs retailers twice as much to accept these unregulated cards as Visa and MasterCard, which is why so many retailers are forced to pass costs onto customers via a surcharge.
As the banks are able to charge more for these cards, they are issuing more of them, placing pressure on Australian retailers to accept unregulated cards.
“The devil will be in the detail. Where retailers do surcharge it is often a blended rate, including the high cost payment systems to simplify the payment for the customer,” Zimmerman said.
“Will retailers need to break out low cost cards they don’t usually surcharge on such as Visa and MasterCard and surcharge the high cost systems separately, or will there be a blended rate for ease of use by customers?
“The ARA and AMPF firmly believes that there is an unequal playing field, with some card systems able to decide their own pricing model and choose if they wish to allow surcharging by the merchant.
“Both Visa and MasterCard are regulated to ensure that merchants are rightfully not charged more than a reasonable Merchant Service Fee, and we believe this should be the case for all cards.”
As noted in the Murray report, proposals for surcharging standards should make surcharging standards simpler and more accurate, while encouraging system providers that are not subject to interchange fee standards to reduce their cost.
"All participants in the payments system must be treated fairly and equally.
"Legislation and regulation needs to include three party schemes (where banks issue co-branded cards allowing systems like Diners Club and American Express to avoid rules), which are significantly hitting retailers’ bottom lines, alongside the currently regulated four party schemes (Visa and MasterCard).
"In principle, retailers do not believe in surcharging, and in the vast majority of cases they don’t for the regulated low cost three major card schemes (including eftpos).
"Where they do need to surcharge is on the unregulated high cost schemes, which gives the consumer the choice of whether they use a high cost, unregulated, surcharged card,a or a no cost regulated card," Zimmerman said.