Credit card surcharge ban risks impeding trade, freight body says

BANNING businesses from recovering credit card processing fees risks impacting their ability to trade across borders, an industry entity says.

The Reserve Bank of Australia previously announced that it was “in the public interest to remove surcharging for all designated card networks”.

However freight entities have spoken out.

The Freight & Trade Alliance (FTA) and its affiliated Australian Peak Shippers Association (APSA) say they support reforms that promote “fair, competitive and efficient payment systems”, but preventing businesses from recovering credit card processing fees did not remove the “underlying merchant service fees charged by banks, payment providers and card schemes”.

Key FTA/APSA concerns include:

• Merchant service fees are a real external cost incurred when customers choose to pay by credit card;
• Customs brokers often facilitate payment of customs duty and GST as pass-through amounts without applying a margin;
• Many importers, particularly SMEs, use credit cards to manage cash flow and secure timely release of goods;
• If customs brokers cannot recover the associated merchant fee, some may need to withdraw credit card payment options, potentially creating cash-flow pressure for importers and delaying cargo release; and
• If these costs instead have to be incorporated into general pricing, customers using lower-cost payment methods may effectively subsidise customers choosing credit cards, while making the true processing cost less transparent.

“FTA/APSA is therefore seeking a reform approach that addresses the underlying merchant fees rather than simply transferring those costs to businesses acting as intermediaries, particularly where they facilitate payment of customs duty and GST to government,” the FTA said in a statement.

The FTA has released a member notice on the topic.

The International Forwarders and Customs Brokers Association of Australia (IFCBAA) has also expressed concern, saying that while they appreciated the objective of reducing transaction costs for consumers, “merchant service fees represent a genuine and direct cost imposed on businesses by payment providers, banks, and card schemes”.