Retailers support FSI recommendation for credit card surcharges

20 OCTOBER, 2015: The Australian Retailers Association (ARA) says retailers support the Federal Government’s Financial System Inquiry (FSI) recommendations to ensure excessive credit card surcharging is legislated and cease exorbitant merchant fees by unregulated payment systems through regulation.

ARA Executive Director and Chair of the Australian Merchant Payments Forum (AMPF), Russell Zimmerman, said the recommendation will benefit both retailers and consumers, allowing retailers to reduce surcharging on high cost payment systems.

The ARA believes there are flaws in the current system, the biggest of which being the lack of regulation of the plethora of high cost and new payment systems coming into the market.

American Express co-branded cards, Diners Club, China Union Pay, and Bitcoin, are not regulated, and all carry greater costs for retailers and consumers alike.

It costs retailers twice as much to accept these unregulated cards as Visa and MasterCard, which is why so many retailers are forced to pass costs onto customers via a surcharge.

As the banks are able to charge more for these cards, they are issuing more of them, placing pressure on Australian retailers to accept unregulated cards.

“The devil will be in the detail. Where retailers do surcharge it is often a blended rate, including the high cost payment systems to simplify the payment for the customer,” Mr Zimmerman said.

“Will retailers need to break out low cost cards they don’t usually surcharge on such as Visa and MasterCard and surcharge the high cost systems separately, or will there be a blended rate for ease of use by customers?

“The ARA and AMPF firmly believes that there is an unequal playing field, with some card systems able to decide their own pricing model and choose if they wish to allow surcharging by the merchant.

“Both Visa and MasterCard are regulated to ensure that merchants are rightfully not charged more than a reasonable Merchant Service Fee, and we believe this should be the case for all cards.”

As noted in the Murray report, proposals for surcharging standards should make surcharging standards simpler and more accurate, while encouraging system providers that are not subject to interchange fee standards to reduce their cost.

“All participants in the payments system must be treated fairly and equally. Legislation and regulation needs to include three party schemes (where banks issue co-branded cards allowing systems like Diners Club and American Express to avoid rules), which are significantly hitting retailers’ bottom lines, alongside the currently regulated four party schemes (Visa and MasterCard).

“In principle, retailers do not believe in surcharging, and in the vast majority of cases they don’t for the regulated low cost three major card schemes (including eftpos).

“Where they do need to surcharge is on the unregulated high cost schemes, which gives the consumer the choice of whether they use a high cost, unregulated, surcharged card,a or a no cost regulated card,” Mr Zimmerman said.

The ARA is pleased to see that many of our submission recommendations have been included in the Government’s final recommendations and that both the small and large retailers that provided input into this process have been heard.

Key points in the ARA’s recommendations are:


  • Principles-based surcharging, where there is no surcharging allowed for low cost systems (eftpos and debit) and businesses are permitted to apply a surcharge which reflects the cost of acceptance for credit
  • To ensure that there is no cross subsidisation, blended surcharging not permitted
  • ACCC given powers to enforce this policy, particularly excessive surcharging. Consumers able to report excessive surcharging to ACCC.

Level Playing Field

  • Any regulation must apply equally to all payments systems including American Express, Diners Club, Union Pay, JCB, PayPal
  • A threshold set at 1.5 percent of retail payment transactions marketshare before regulation is applied
  • Regulation to capture new forms of payment systems under this model as they emerge.


  • A significant and meaningful reduction in the disparity which currently exists between large and small merchants
  • A defined range of interchange rates applied to industries and products
  • An annual reset to ensure regular compliance with a weighted average of 50 basis points for interchange rates
  • Allowance of ‘special rates’ for a defined period of time, to allow schemes to incentivise new technologies and innovations in the market (to recognise that large merchants can assist with early adoption through leverage of their scale)
  • Acquirers to separate debit and credit rates in their provision of pricing to all merchants



For interview opportunities with ARA Executive Director, Russell Zimmerman, call the ARA Media team on 0439 612 556 or email


About the Australian Retailers Association:

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $284 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia. For more information, visit or call 1300 368 041.




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