New surcharge standards create uncertainty

Australia’s accommodation industry must not be worse off as a result of variations to standards for merchant surcharging on credit cards, according to the Accommodation Association.

To assist with ensuring this is the case, the Association says it plans to formally communicate this view to the Reserve Bank of Australia.

“Unlike some other industries, there has been no overwhelming evidence that operators of accommodation businesses have imposed excessive credit card surcharges – the focus has been cost recovery,” said the Chief Executive Officer of the Accommodation Association, Richard Munro.

“Yet accommodation businesses are being forced to deal with increased uncertainty and red tape as a direct result of the variations to the surcharging standards.

“The uncertainty comes from what defines a ‘reasonable cost of acceptance’, which is what surcharges will be limited to from next year, while there is a risk that under the changes, accommodation businesses will have to spend time and money justifying the level of surcharges.

“The reality is that intense competition already exists in the accommodation industry and that if an individual business is deemed to have a credit card surcharge that is too high, then consumers will simply choose to stay in another establishment.”

Mr Munro says there are a number of aspects which determine the level of credit card surcharges.

“As well as the direct cost that is imposed by credit card schemes, there are a range of indirect costs,” Mr Munro said.

“These include the cost of renting/buying and maintaining credit card payment infrastructure, the cost of communication links between the point of sale and financial institutions and gateway fees, accounting personal time and other fees.

“These are legitimate costs which are being factored in when businesses calculate credit card surcharge levels.”

Source: Accommodation Association of Australia, 13 June 2012