Beware of high credit card surcharges, Council warns

06/11/2013 16:08

Consumers are encouraged to report traders who impose exorbitant surcharge for the use of their credit card facilities.

The Consumer Council of Fiji makes the call in light of the Reserve Bank of Fiji‟s recent decision to withdraw its instructions to commercial banks regarding the credit card "No Surcharge Rule" issued in September 2012.

From past complaints, the Council is aware that merchants were charging more than the merchant's fee imposed by banks/credit card companies. Some traders were using credit card surcharges as a new revenue stream.

In one of the cases dealt with by the Council. An airline imposed exorbitant credit card surcharges on a customer. The airline imposed an “applicable fee” of $10 per ticket for credit card purchases. The credit card fee was charged “per ticket” rather than “per transaction” thus consumers who opted for online purchase of airline tickets for a family of four had to fork out $40 for using credit card, although four tickets were paid in one transaction.

The Council also handled a case where a trader was imposing surcharges on debit cards.The Council agrees with RBF that consumers have a choice of payment system but that does not mean that merchants should charge more than the actual cost of processing the payment. The Council hopes that the RBF will closely monitor surcharging practices and take necessary action against those profiteering from the surcharge.

In other countries surcharge for credit card is banned or strict rules are set for merchants to follow to stop surcharge abuse. For example a notice at the store's entrance or online advising customers that a surcharge applies on purchases made with a credit card. At the point of sale a disclosure of the exact percentage is made within the surcharge limit. In other words surcharge limit is set. If the limit is not set, the merchants can only charge the actual costs of processing credit card transactions. In addition, sales receipts also show exact amount of the surcharge.

We need such rules considering our market is small and competition is limited.

While the Council appreciates RBF‟s advise to merchants and commercial banks to display the surcharge rate but what is not clear is what action RBF will take if merchants charge more than the merchant's fee or do not display the surcharge rate.

The Council is encouraging consumers to discuss the mode of payment and the surcharge rate (if any) before shopping for goods or booking the services to avoid disappointment.

Consumers must also note that there the surcharge is not applicable to debit cards.

The Council is calling on the consumers to come forward and lodge complaints against those traders imposing unreasonable amount in surcharges on the credit card usage.