The Australian Travel Industry Association (ATIA) has urged the Reserve Bank of Australia (RBA) to reconsider proposals that would remove merchants’ ability to surcharge for card payments, warning that such a move could severely impact travel agents, tour operators and their customers.
In a submission to the RBA’s Review of Merchant Card Payment Costs and Surcharging, ATIA said 95 per cent of its members, including retail and corporate travel agencies, tour operators, consolidators and wholesalers, rely on surcharges to recover the genuine costs of card payments.
Unlike most retailers, travel agents handle large transactions averaging between $6,400 and $10,000, often paid up to 100 days in advance.
This exposes businesses to risks such as extended chargeback liabilities and demands from acquirers for bonds of more than $1 million to maintain merchant facilities.
Merchant fees on such bookings can exceed $100 per transaction, a cost ATIA says is impossible to absorb given average industry profit margins of just 0.75 to 3.9 per cent.
ATIA warned that a full ban would either force businesses to increase base prices or introduce higher service fees, resulting in across the board cost of living increases.
“This approach removes transparency in payment costs and unfairly shifts the financial burden onto all consumers at a time when cost of living pressures are already acute,” the submission stated.
The association has instead called for a compromise banning surcharges on debit cards only while maintaining the ability to surcharge credit card payments. ATIA said this would avoid the most damaging consequences for small businesses while still delivering estimated consumer benefits of $650 million.
It argued that travel industry payment providers can already differentiate between debit and credit cards at the point of transaction and concerns about implementation costs reflect “a lack of long term investment” by large payment platforms.
ATIA has also called for broader reforms alongside any surcharge changes, including simplification of scheme rules, greater transparency and caps on scheme fees, mandatory Least Cost Routing applied by default on all debit transactions, and delaying any ban for at least 12 months to allow businesses to renegotiate contracts and adjust systems.
The association has recommended a four year review to ensure reforms are delivering the intended consumer and industry benefits.
