The Reserve Bank’s decision to ban surcharging on debit and credit cards will force up the cost of travel for every Australian and place travel businesses under unacceptable financial pressure.
That was the warning from the Australian Travel Industry Association (ATIA) following the announcement of the ban, effective from October 1.
Interchange fees have been reduced from 0.8% to 0.3% for domestic consumer cards. ATIA says the reduction will deliver little meaningful relief, because interchange is only one component of total payment costs.
The agent organisation believes once scheme fees and acquirer fees are added, travel businesses are looking at a total payment cost of at least 1% of transaction value, a cost that has not been reduced by today’s decision.
ATIA is warning members that prices across airfares, hotel bookings, tours and agent service fees will need to rise by at least 1% from October 1 to absorb costs that can no longer be recovered through surcharging.
In a closed session today, the RBA confirmed it is not expecting price decreases as a result of its decision. ATIA believes price increases are inevitable, particularly in travel.
“The only stakeholders who will be happy with today’s decision are Visa, Mastercard and the big four banks,” said Dean Long, ATIA CEO.
“Every business group in Australia that does not have a vested interest in protecting bank profit margins argued against this outcome.
“The RBA has chosen to back the schemes over Australian businesses and the consumers who will pay more because of it.”
The RBA anchored its decision on data showing just 16% of businesses across the economy surcharge.
However, ATIA disputes that figure, claiming it was collected from institutions with a direct financial interest in today’s outcome and does not reflect the reality of the Australian marketplace. ATIA believe the 16% figure is not a credible basis for a decision of this consequence.
“If you bought a coffee today, you paid a surcharge. If you booked a flight or a holiday, you paid a surcharge,” added Mr Long.
“The businesses that don’t surcharge – supermarkets, pharmacies, lottery organisations – are the exception, not the rule.
“The 16% figure is wrong and it has been used to justify a policy that will cost Australian consumers and Australia’s small businesses real money.”
