Tweet: New #MasterCard survey shows consumers being hit by unfair surcharges http://mstr.cd/1lx7wk9

Sydney, 27 August, 2014

New research by MasterCard indicates Australians are paying $1.6 billion annually in credit card surcharges.

A survey of more than 2,000 credit cardholders in Australia commissioned by MasterCard found that on average, Aussies are paying over $130 each per year in surcharges. Consumers cite airlines, taxis, hotels, utilities and bars/restaurants as the most likely to charge a significant surcharge for using a credit or debit card.

“Australians love the convenience of paying by debit or credit card, but don’t like being slugged extra for using them. Eighty-six percent of consumers take note of surcharges and factor them into their purchasing decisions,” said Brent Thomas, Vice President, Public Policy & Corporate Affairs at MasterCard Australia.

Higher income earners are the most conscious of surcharges: in households earning more than $130K per annum, 62% of respondents “always take note of surcharges”, compared to 53% of those earning less than $40K per annum.

“But regardless of income, people don’t appreciate being hit with an extra fee when they pull out their debit or credit card,” Mr Thomas said.

“MasterCard’s research shows that surcharges don’t just hurt consumers but businesses as well. Cost-conscious shoppers are simply walking away instead of paying extra,” Mr Thomas said.

The research also found businesses are losing out when they charge for credit cards, with 41% of Australians reconsidering a purchase after seeing a surcharge. In fact, 1 in 4 have voted with their feet and gone elsewhere, and 1 in 3 have decided not to buy at all.

“We know surcharges can also lead consumers to pay by cash instead[1], which is often more expensive and problematic for businesses to process”. One reason businesses apply these charges, however, is that the cost of accepting cards isn’t consistent.

“This is a problem for consumers, because merchants will often “blend” surcharges for higher costs, regardless of which card the consumer pays with.

“It can cost merchants more than twice as much to accept an American Express card, compared with a MasterCard, because we are covered by different regulation. Australia needs a level playing field for the industry, to bring down overall costs of card acceptance and benefit both business and consumers. This is one of the most urgent messages we outlined in our submission to the Financial Systems Inquiry on Tuesday,” Mr Thomas said.

“Current regulations on surcharges allow merchants to surcharge. Some merchants are surcharging at levels which are really unfair to consumers, and there is effectively no government enforcement around this.

“Right now there is no effective enforcement of the surcharges which merchants can apply. The charges simply need to be ‘reasonable’ – leaving it open to interpretation and debate,” he said.

The Financial System Inquiry is looking into regulation of the payments sector. MasterCard has lodged a submission responding to the FSI Interim Report, which is available on request.

Survey Findings Snapshot

 About the Survey

• The survey looked at attitudes and practices related to credit card surcharging, and was conducted by Galaxy research on behalf of MasterCard Australia, through an online permission-based panel between Wednesday 13 August and Monday 18 August 2014.
• The report is based upon n=2,035 Australians with a credit card. A representative sample of 2,458 Australians aged 18 years and older was drawn in proportion to age, gender and location across Australia and surveyed to determine eligibility for the study.
• Eighty two percent of adult Australians have a credit card.
• Following the completion of interviewing, the data was weighted by age, gender and area based on starters (the 2,458 initial national sample prior to credit card definition) to reflect the latest ABS population estimates.

More information on the Interim Report can be found at http://fsi.gov.au/publications/interim-report/02-competition/payments-sector/

About MasterCard

MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardAU,  @MasterCardAPand@MasterCardNews, join the discussion on the Cashless Pioneers Blog and subscribe for the latest news on the Engagement Bureau.

Media Contact:

Belinda Thomson, Weber Shandwick
Eemail: bthomson@webershandwick.com
Tel: +61 2 9994 4454 or 0421 193 669

[1]Reserve Bank of Australia (June 2014) News Bulletin (Graph 5, pg 45)