Card Free Limits Won’t Affect Cabcharge
According to Cabcharge, a taxi payments operator, the move of the Reserve Bank of Australia to limit surcharges to credit card transactions will not affect them.
With this, merchants are only allowed to charge reasonable transaction fees that are reflective of the costs they have incurred for providing and accepting payment of cards. This may include bank fees and terminal fees. This will begin on January 1 next year.
This is probably in response to the complaint of Choice, a consumer group, against Cabcharge, as well as airlines Qantas and Virgin Australia, for allegedly charging excessively high surcharges on customers who pay with their credit cards.
However, Cabcharge is quick to say that the fees on taxi payments that they impose are not actually surcharges but are simply financial services charges.
“The costs and challenges of providing and operating the Cabcharge system as a financial service provider to the taxi industry nationally are significant and of a different nature to the examples referred to in the Variation to Surcharging report,” Cabcharge’s statement said.
“Cabcharge’s transaction business is based on service fees in the taxi environment in which taxi fares are totally regulated. Cabcharge’s business applies fees on financial services rather than as a surcharge on the underlying transaction,” it added.
According to Matt Levey, Choice’s Head of Campaigns, he finds gray areas in the ruling of the Reserve Bank.
“A lot of this absolutely depends on how you define the reasonable cost of processing a credit card. The RBA has indicated that they are going to offer some guidance around that, but they won’t actually be, if you like, mandating that legally. At the end of the day, it’s actually going to come down to these agreements between the credit card providers and the merchants to actually draw down those costs,” he said.
This move will supposedly allow Mastercard and Visa card, along with other credit card companies, to take action against overcharging companies; according to David Masters, Vice President of Strategy at Mastercard.
It is true that credit cards are very convenient to use. However, people do not know that the surcharges are usually very high. And when the card holder does not know how to use the card, even more financial problems arise, burying the individual deeper into debts. So when in need of instant cash, it would be better to avail of Cash Advance.
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Source : ABC.NET.AU