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How to avoid excess credit card surcharges

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Credit card holders will be pleased to hear that the Reserve Bank has concluded its review of card payment regulation.

D-Day for the new standards is set for September 1, 2016, for large retailers and September 1, 2017, for other retailers, so there are only a few months to go before excess surcharging will be criminalised by the Australian Competition and Consumer Commission (ACCC).

What credit card surcharges should I be wary of?

credit card surcharges

From September, large retailers will be allowed to surcharge you only for the "reasonable cost" of accepting card payments.

This largely includes interchange fees, which have also been reduced for merchants. Acceptance costs for retailers will eventually be clearly defined in percentage terms, so you should stop seeing high fixed-amount surcharges for low-value purchases.

No credit card interchange fees will be permitted to exceed 0.8% and no debit interchange fees will be able to exceed 15 cents (for fixed amounts) or 0.20% (for percentage-based amounts).

The weighted average benchmark for debit cards will be lowered from 12c to 8c, which will come into effect on July 1, 2017. American Express companion cards will also be subject to the new interchange fee regulations.

How will I know if I'm paying too much?

The Reserve Bank says that Debit MasterCard and Visa Debit may cost merchants around 0.5% of the transaction value, while MasterCard and Visa Credit may cost around 1%-1.5%.

For American Express card holders, the RBA says it is "not unusual" for merchants to pay around 2%-3% for a payment.

If you want to avoid a surcharge altogether, retailers are expected to offer you a way to pay without a surcharge, either with cash or via BPAY.

Surcharges must also be clearly stated at the point of sale, and be included in total customer refunds.

What should I do if I'm suspicious of credit card surcharges?

Sally Tindall, from RateCity, says if you think you're paying more than you should for paying with a card, you can register a complaint with the consumer watchdog.

"The ACCC has said it intends to focus on education and awareness of the new credit card surcharge rules. However, it has also indicated it won't turn a blind eye to breaches," she says.

"Legislation passed back in February has given them the teeth to pursue anyone breaking the new rules, including the ability to issue fines of up to $108,000, so it will be interesting to see how quickly they utilise these new powers after September 1."

It's important to remember that while the ACCC have been given the authority to police credit card issues, Tindall says that at the end of the day it's up to consumers to keep an eye out for wrongdoing and to lodge a complaint when something's gone wrong.

"The ACCC will also need to rely heavily on the general public for feedback as they won't have the resources to be everywhere," she says.

"If you think you've been slugged with an excessive surcharge you should contact the ACCC's complaints hotline or fill in their online complaints form."

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Steph Nash was a staff writer at Money until 2017.
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