Perception is reality

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Merchants pocketing an extra 1% on Credit Cards!

From Money Magazine’s July 2011, THE BUZZ: Action of Card Surcharges

Credit Card Surcharges are a major annoyance for me! I am an American Express loyal, apart from the excellent customer service, the key thing for me on my Amex card is the points!

Earning points on Amex these days may seem to be on par with banks & others issuing Visa & Mastercard’s however the key differentiator is what they call the ‘burn’ rate. The burn rate is how far your points get you when you cash them in, and Amex points always (in my experience) for further than any other. 

Where this article really bites is that it highlights that merchants are taking a piece of the merchant fee. At the time this article was published, the RBA figures showed “the average retailer pay to have transactions processed by banks is 0.86% for Mastercard and Visa, and 1.89% for American Express.” When I go shopping, if I get surcharged on my Amex, it’s usually 2% +, is this right?

The article goes onto say that “research firm East & Partners suggest consumers pay much more.”  Yep, we do, a lot more! "In December 20120n, the average surcharge for Mastercard credit cards was 1.8%, Visa 1.9%, [and] American Express 2.9%….."

So the merchant is pocketing a little piece of the pie, after all, merchant fees are an agreement between the provider (bank or Amex) and the merchant, so everyone is generally on something different. How can merchants pocket an extra 1% of the transaction and get away with it! 

I am against surcharging all together, it’s simply a cost of doing business and should be factored into the price of a good or service, and not on top of! 

The article states that the RBA is going to reverse legislation that makes surcharging illegal, fantastic, however this was back in June 2011, and nothing is yet to happen :/

I believe until legislation against surcharging happens, the merchant service fees of all merchants should be published for all to see, and if you are being surcharged, you will then have to power to know what is should be!

Filed under amex axp visa mastercard rba small business merchant bank credit card charge card american express money money magazine MR Membership Reward Points Membership Rewards banks bank banking retail hotel cabcharge unfair illegal legislation Reserve Bank of Australia RBA Reserve Bank Government finance

  1. darrenallatt posted this