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Airline, hotel and taxi credit card surcharges to be slashed after the Reserve Bank rules companies cannot ‘gouge’ customers with…

  • Reserve Bank of Australia has announced new rules on surcharging
  • Airlines, taxis, hotels and ticket booking companies will no longer be able to charge customers extra fees for using credit cards
  • Domestic booking fees range from $7 – $8.50 depending on the airline
  • Under new laws an $8.50 Jetstar fee would fall to just 65 cents

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Airlines, taxi companies, hotels and ticket booking companies will no longer be able to charge customers extra fees for using their credit cards, in new laws introduced by the Reserve Bank.

The Reserve Bank of Australia has announced new rules on surcharging, which will cut the cost of airfares, especially cheaper ones, reported the Daily Telegraph1.

Under the new rules, airlines will only be able to pass on the amount it costs them to offer the service, about 0.77 per cent of the transaction, instead of flat fees of up to $30 per flight.

Airlines, taxi companies, hotels and ticket booking companies will no longer be able to charge customers extra fees for using their credit cards

The new laws, introduced by the Reserve Bank of Australia, will take effect from September 1, mean airlines including Qantas (pictured) will only be able to pass on the amount it costs them to offer the service

In a statement the RBA said the new standard would ‘ensure that consumers using payment cards from designated systems (eftpos, the debit and credit systems of MasterCard and Visa, and the American Express companion card system) cannot be surcharged in excess of a merchant’s cost of acceptance for that card system.’

Domestic booking fees in Australia currently range from $7 per flight for Qantas, $8.50 for Jetstar and Tiger and $7.70 on Virgin.

The charges are even more on international flights.

WHAT ARE THE DOMESTIC BOOKING FEES IN AUSTRALIA?

Qantas – $7.00

Jetstar – $8.50

Tiger – $7.50

Virgin – $7.70

The charge is also increased for international flights.

Source: Choice

According to estimates from consumer group Choice, under the new rules the Jetstar charge of $8.50 would fall to 65 cents.

The RBA will introduce the changes from September 1 for large merchants and a year later for other merchants, enforced by the Australian Competition & Consumer Commission (ACCC).

‘With the cost of acceptance defined in percentage terms, merchants will not be able to impose high fixed-amount surcharges on low-value transactions, as has been typical for airlines,’ the RBA said.

Consumer advocacy group Choice said the decision was long overdue and consumers should keep campaigning about fixed fees, describing it as ‘a gouging racket’

Consumer advocacy group Choice said the decision was long overdue and consumers should keep campaigning about fixed fees, describing it as ‘a gouging racket’.

In a statement Qantas, who own Jetstar, said both airlines plan to move to percentage-based card payment systems, as the standards require.

It urged regulators to make sure the new rules applied to all carriers that sell tickets in Australia, not just airlines.

Mastercard reportedly welcomed the changes sand said in a statement that they were ‘delighted’ the RBA had stepped in to rectify the problem.

As well as changes to surcharges, the RBA also announced a cap on average interchange rates which will affect premium and ultra-premium rewards cards.

The changes will mean the card holders will either have to spend more to earn a point, need more points to redeem rewards, or both.

References

  1. ^ Daily Telegraph (www.news.com.au)

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