Card payment surcharging rules introduced several years ago have had the effect of reducing the cost of surcharges. But because consumers are using payments cards for more low-value transactions, surcharges as a percentage of transaction values have gone up.
The latest Reserve Bank Consumer Payments Survey, which is prepared every three years, reports that since 2016 the median surcharge has declined from 80 cents per transaction to 60 cents.
Rules introduced by the RBA allow businesses to recover only the cost of accepting card payments. The rules took effect for large merchants in 2016 and for smaller merchants in 2017.
Survey participants said they paid surcharges on 4 per cent of card transactions on average.
When measured as a percentage of the transaction value, the median surcharge had risen from 1 per cent to 1.5 per cent over three years.
Cards overtook cash as the most common way of making payments of $10 or less in 2019. Cash accounted for 45 per cent of these payments, down from 62 per cent in 2016.
With more low-value card transactions, fixed surcharge fees represent a higher proportion of the transaction value.
Surcharges were more often paid on credit card transactions (in 5 per cent of cases) than on debt card transactions (3 per cent). This reflects that fact that credit cards tend to be more expensive for merchants to accept.
Surcharges were more common when the transaction was online (in 8 per cent of cases).
“This could partly be because consumers are more likely to have a ready alternative to cards for in-person payments, that is, cash. Online transactions are also sometimes more expensive for merchants to accept,” the report said.
The survey confirmed that consumers don’t like paying surcharges. Around 50 per cent of respondents said that faced with a surcharge they would instead choose a non-surcharged method to make the payment.