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Winners and losers of the credit card surcharge ban

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New regulations governing debit and credit card surcharges have come into effect this month, so Australians can say goodbye to paying massive fees when they whip out the plastic for flights, tickets, hotels and other purchases from big businesses.

The changes came into effect for big businesses on September 1 and were made in an effort to cut back on the $1.6 billion that Aussies pay in card surcharges each year.

Big businesses are now only allowed to charge fees that reflect the "true" cost of the customer using their credit or debit card to pay for transactions. Although those costs can vary, the Reserve Bank has released a guide to the typical surcharges cardholders can expect to pay now:

credit card surcharge

Payment type Typical surcharge
Visa or MasterCard (debit) 0.5%
Visa or MasterCard (credit) 1-1.5%
American Express 2-3%

With the Australian Competition and Consumer Commission empowered to police the new rules and issue penalties to companies found guilty of excessive surcharging, comparison site Mozo.com.au takes a look at the winners and losers from the shake-up:

The winners

The big winners are consumers, who will no longer pay huge fees for the convenience of using Visa and MasterCard credit and debit cards.

Frequent flyers will particularly benefit from the changes, as airlines are among the most criticised companies for over-the-top surcharging. Most airlines will replace flat fees with percentage-based ones - for example, the credit card surcharge on a $400 domestic Qantas flight would drop to 1.3%, or $5.20, from the flat fee of $7.

The losers

Large corporations that have been profiting for years from excessive surcharging will be the main losers, as their profits take a hit from the new, fairer regulations. Airlines, hotels and ticketing companies are some of the main culprits.

It's not good news for all cardholders, either: those with cards issued directly by American Express and Diners Club won't see the savings, as these direct-issued cards aren't covered by the surcharge changes. Online payment types such as PayPal and BPay aren't included either.

Anyone regularly hopping in a taxi won't benefit either - charges for using your card in a taxi are regulated by state authorities, so aren't affected by the new regulations. The good news, though, is that most states have put an end to the typical 10% fees passengers were paying by capping taxi surcharges at 5%.

Some consumer advocate groups have also warned that the changes might just lead businesses that weren't surcharging to start, and are calling on businesses to scrap surcharges entirely, instead absorbing the cost of credit card payments into their bottom line.

While big businesses may be equipped to do this, smaller businesses may feel the sting of a successful campaign to cut surcharges entirely. The new rules won't take effect for small businesses until September 2017, so there's still time for that issue to be ironed out.

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