By Lilia Guan
The Reserve Bank of Australia has decided, during a Payments System Board meeting, to vary the Standards relating to merchant surcharging on credit and scheme debit cards.
The variation allows card scheme rules to limit surcharges to the reasonable cost of card acceptance.
According to the Reserve Bank the variation continues to ensure that merchants can fully recover their card acceptance costs.
The decision to vary the Standards reflects the Board's concerns about the increase in cases where surcharges appear to be well in excess of acceptance costs or where surcharges are ‘blended’ across card schemes even though merchants' acceptance costs may be higher for some cards than others.
RBA intends that its variation will improve price signals by enabling a card scheme to address cases where merchants are clearly surcharging at a higher level than is justified for acceptance of its card products.
The variation to the surcharging Standards and the rationale for the Board's decision are discussed in detail in the attached Regulation Impact Statement .
The varied Standards will come into force on 1 January 2013.
The Bank has noted that some parties in consultation expressed a desire for more clarification as to the meaning of ‘the reasonable cost of acceptance’ in the varied Standards.
The Bank is therefore giving consideration to publishing a guidance note and a draft Guidance Note.
RBA said the draft Guidance Note makes clear that at a minimum the reasonable cost of acceptance includes the merchant service fee, but it may also include a range of other costs.
MasterCard has welcomed the decision by the Reserve Bank of Australia (RBA) banning excessive surcharges.
It means merchants will no longer be able to use surcharges on card payments to bolster their revenues.
MasterCard’s head of Strategy and Corporate Affairs David Masters said MasterCard supported the RBA’s decision.
“This change will provide welcome relief for consumers who have been subject to unfair fees or gouging by some merchants when they’ve used their MasterCard cards to pay,” he said.
MasterCard’s No Surcharge Rule – which prohibits merchants from surcharging for MasterCard transactions – was established to protect consumers.
In 2003, the RBA banned MasterCard from enforcing that rule in Australia which effectively heralded the start of surcharging here.
Mr Masters told Government News said surcharging effects anyone with a MasterCard or Visa.
“This will help stop merchants misusing surcharge as a way to add revenue – which never was the intention,” he said.
“Surcharging doesn’t just affect consumers, it also affects anyone with a corporate credit card including government agencies.”
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