It wasn't long ago when airlines could add up to a 10 per cent surcharge to their flight prices for paying by card. Given that those booking online or by phone couldn't pay by any other method, we couldn't get out of them. We knew the fees were dodgy – the actual cost to businesses of processing card transactions is usually less than 1 per cent – but if you want to travel anywhere in Australia without taking days or weeks to get there, you paid anyway.
The fact that companies – and not just airlines, taxis and ticket sellers were also really bad, and often even small cafes and grocers – were profiting from these surcharges was so unjust that even federal politicians noticed. New legislation took effect last year which made it unlawful for businesses to charge more for an EFTPOS transaction than it costs to process it.
It's a start, but there's more to achieve. The great Australian EFTPOS minimum charge continues to gouge consumers. You go into a place for a coffee but because the drink costs under $5 or $10 or whatever arbitrary amount the cafe decides a card transaction should be, and because there's no nearby ATM, you end up walking out with a slice of cake and a bottle of water you didn't want just to make up the difference.
Granted, smaller businesses do pay more for accepting credit. Big businesses that handle lots of card transactions pay less to their bank for each one than smaller businesses. Legislation to make the costs of running a small business proportionate to their profits and power is needed.
But getting gouged by the bank doesn't make it OK to gouge the customer. The cost of processing a payment made by a customer through their savings or cheque account (as opposed to credit) is low for all businesses. Accepting card payments also means saving on cash handling, and security and insurance costs associated with having cash on the premises.
Other higher business costs also aren't charged to the consumer. You shouldn't charge someone more for coming in on a Sunday even though staffing costs are higher. Nor would you charge people extra if they spent longer in the store and asked lots of questions even though they may demand more time and energy than people who quickly buy something.
These, like EFTPOS, are normal business expenses. If you can't wear the costs of being in business, you shouldn't be in business.
The European Union is further ahead – a ban on charges for card payments will come into effect in January next year. Consumers will be able to pay in a way that's most convenient to them without being shocked by unexpected fees at the checkout. Australia should follow suit.
Erin Stewart is a Fairfax Media columnist.
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