The Payments System Board may allow credit card schemes to introduce rules that oblige merchants to limit the level of surcharges applied to payments made with credit cards. The PSB is
asking the industry for views by July 20.
As part of the PSB's regulation of credit card schemes in the early 2000s, MasterCard and Visa were obliged to drop the no-surcharge rule that applied to all merchants (even if ignored by a handful).
The regulator also leant on American Express and Diners Club to voluntarily drop their corresponding rules.
The rationale for the regulation was to make more of the costs of selecting credit cards as a payment mechanism transparent to customers.
Since 2003, surcharging has become more common and instances of egregious charging - the surcharge bearing no relation to the fee paid by the merchant to the bank - more common too.
Research, as opposed to anecdote, on the extent of surcharging is thin. In a discussion paper yesterday, the PBS cited the periodic surveys by East & Partners.
East's research found that in December 2010 the average surcharge for MasterCard credit cards was 1.8 per cent, for Visa it was 1.9 per cent, for American Express it was 2.9 per cent, and for Diners Club it was four per cent.
Its research found that these average surcharge levels are around one percentage point higher than merchant service fees for American Express, MasterCard and Visa cards, and around 1.8 percentage points higher for Diners Club cards.
The East research shows that around 10 per cent of surcharging merchants apply a surcharge of five per cent or more.
A 2010 study of consumer use of payments by the Reserve Bank of Australia found that consumers paid a surcharge on five per cent of their credit card transactions over a one-week period, with this proportion being little changed from a similar study conducted in 2007, despite the greater prevalence of surcharging.
The most common experience of surcharging was in the travel industry, where it is common on the purchase of airline tickets, paying for rental cars and also hotel bills.
While not mentioned by the PSB, the most common excessive surcharge remains on taxi payments - something pioneered by Cabcharge in the 1990s (in spite of card scheme rules).