Over the past couple of weeks besides I have been spending some time in New Caledonia and Vanuatu, I was also in Sydney and Christchurch.
But what’s up with these “fake” credit card surcharges that some (not all) hotels seems to be collecting that is nothing but a revenue enhancement for them?
There is no chance in hell that a hotel in New Zealand (Novotel Christchurch) would be paying a 2% swipe/merchant fee for accepting Visa/MasterCard or even a 1.5% fee which was case with the Fairmont Blue Mountains, that is not part of Fairmont chain but Accor’s MGallery.
Swipe/merchant fees have been going lower for years. When I had a merchant account in Finland back in the 1990’s, the fee was 0.8% for swipe transactions and no other fees. A friend of mine who runs a restaurant in Spain is paying less than one percent.
The European Union introduced legislation this past spring where the fees are capped at 0.3% for credit cards and 0.2% for debit ones for payments processed in member states.
Conclusion
These hotels and other merchants (10% for taxis in Sydney – no wonder I always used Uber while taxis were sitting outside) basically probably charge double or more than what these swipe fees in Australia are or should be.
If the banks are really charging these fees, they probably offer rebates or other incentives for merchants to use their services like in the case with the Dynamic Currency Conversion scam.
![Airfare of the Day [Business Class] AEROMEXICO Madrid to Sao Paulo from 898€](https://cdn3.loyaltylobby.com/wp-content/uploads/2021/10/xbuilding-ga29091764_1280-sao-paulo-120x86.jpg.pagespeed.ic.VQ8lWfmLI6.jpg)
“European Union introduced a legislation this past spring where the fees are capped at 0.3% for credit cards and 0.2% for debit ones for payments processed in member states.”
Not true – paypal for example is much higher in Europe as is other merchants & companies charge far more than this in the UK
http://www.consilium.europa.eu/en/press/press-releases/2015/04/20-capping-fees-card-based-payments/
This reference appears to be for interchange fees. That is not the whole story, and from a surcharging point of view it is the merchant fees that count.
Only part of it.
0.3% for credit cards and 0.2% is only the interchange fee. There are a) Interchange fee – paid to card issuing bank, b) Assessment fees – paid to card schemes like Visa or MasterCard, c) Acquiring fees – to the acquiring bank, d) Processing fees – paid to the processing gateway
Does not apply to pre-paid rates (at least at Accor hotels) so that’s the best way to get around c.c. surcharges 😉
Then you might get hit with forced Dynamic Currency Conversion scam!
Not an issue unless travelling abroad 😉
If the additional card fees are this high, I tend to withdraw cash and pay in cash instead of by card. With my Revolut prepaid MasterCard there is no fee for cash withdrawals and the interbank rates are used. You can get the Revolut app and order the card https://revolut.com/
Australian banks are charging high fees vs. the rest of the world. I know of a large business whose true cost to process credit card fees (Mastercard /Visa) is 1.4% including the interchange fee. Added to this, many business must Charge GST/VAT to the credit card recovery fee (an additional 10-15% AU vs. NZ) and remit this to the government. So in order to recover the fee it is 1.6-1.7% really.
bs. I have run a small business in Sydney, turnsover less than $3m in revenue. I pay the bank 0.7% flat fee.
Australian interchange fees are published by Visa and Mastercard. The attached excludes the transaction fee charged by the merchant bank itself which is another 0.3%. You will see that the interchange fees range depending on the type of card used, and merchant has no way of distinguishing which card attracts which fee. On average some B2B businesses whose customers transact large volumes will shift the mix to higher interchange fees. Amex fees are a closed loop and tend to be higher than this.
http://www.visa.com.au/aboutvisa/interchange/interchange.shtml
http://www.mastercard.com.au/merchant/getting_started/interchange_rates.html
In addition, GSTR 2014/2 a binding tax ruling requires merchants to collect VAT/GST on top of any surcharge.
Here’s a summary of the merchant fees charged by various Australian banks:
http://www.paymentgatewayaustralia.com/reviews/australian-bank-comparisons
Cheap. cheap. cheap. hotels should be just swallowing the cost of this as a means of doing business.
A friend of mine with a bar in Tokyo says his fees are between 3-5% depending on type of card (Visa & MC are lowest, Amex and Diners are highest). Japanese government also charges consumption tax on the fee, adding 8% to whatever the fee is. In Japan though it’s quite rare for businesses to pass the fee on to the customer, I have only seen it a few times in Tokyo, most businesses either treat it as a cost of doing business or else they go cash only. There are quite a few though that won’t swipe a card for anything less than 2-3,000 Yen which I find to be quite silly, I’m not aware of any minimum charge from the CC processor.
I own my own online travel business in the E.U. and I have to pay 4% to my bank for processing any card as long as my revenue is under 100k€ a year.
I’ve not found a single bank / company which would even offer anything under 1%, so everyone is talking about the EU regulation but I can’t find any company that offers that rate
The fee for non-swipe transactions is usually higher due to higher fraud that would back to haunt the merchant anyway. You are paying wayyyyy to much.
Do you know of any cheaper alternatives? So far I haven’t found anything yet :/
Amex generally charges 3.5%. How does the author think credit cards pay rebates of 1% or more back to card holders. Its the credit card companies that are looting the consumer. I agree with the hotel, however in the USA merchants are not able to charge a surcharge at this time. Hopefully it will change in the future.
Have you missed the whole debate around the higher credit card merchant fees charged in part due to the increased benefits of premium cards? Merchants in North America have seen fees of 2% to 3% standard. In Canada, Visa and MasterCard agreed to cap their fee at 1.5% to counter possible government legislation to permit merchants to charge consumers the same “fee” as has been the practice in Australia/New Zealand. Not sure about that 0.2% figure but it’s not the merchant fee.
http://www.thestar.com/business/personal_finance/2013/07/23/how_credit_card_fees_for_merchants_work.html
http://www.cbc.ca/news/business/visa-mastercard-agree-to-hold-interchange-fees-at-1-5-for-5-years-1.2822985
So first the steal 1.5% from you and then additional more than 9% with the dynamic currency conversion. I always thought the dynamic conversion would be extra 2-3%, but found out it was much more than that after my stay in Melbourne. They first charged me in my home currency, which I asked them to revert. Then I was charged in AUD. On my credit card statement I had both amounts and the difference was a staggering 9%. Rip off!
While true that interchange fees are only part of the costs incurred by merchants in handling credit card payments, it is also true that a number of large merchants (who enjoy heavily discounted bank charges on their credit card acceptance systems due to the volume of transactions processed) have been charging facilitation and service fees exponentially about the costs of providing that service (the big tourism players are the worst offenders).
The Australian Government is loathe to intervene in commercial transactions – indeed, part of this problem arose because the Reserve Bank of Australia prevented credit card companies from enforcing a ceiling on credit card handling surcharges a few years back – but the extent of unfair and unethical practice here has forced action.
Australian merchants will be banned from levying surcharges for credit and debit cards above the cost of processing them by July next year under new rules.
A rule that should have always been in force, but sadly was left to the market to self-enforce (and guess what, they didn’t).
Small businesses pay disproportionately provide credit card facilities, to big business it’s an insignificant transactional cost, yet no small business has ever had the gall to so abuse the charges levied on consumers as the big boys did.
Note that not all the big industry players were bastards – it’s telling that Woolworths or Coles (our two huge supermarket chains in Oz) never levied credit card surcharges on customers – even AMEX ones – despite groceries being a highly price sensitive commodity (so if costs were significant, they be loathe to transfer them into shelf pricing, due to the uncompetitive disadvantage that creates) and the revenue per transaction being much lower (increasing processing costs) than the typical flight or hotel room cost.
So yes, Europe was right in stopping credit card use fee extortion (just like they are in putting more rigorous and ethical obligations around flight compensation rules).
Still, Australians are used to copping it in the arse – paying more than others and generally enjoy less consumer protection.
I cants help it, eyes trid erlyr to nots be ofinsiv. Wow. Do you think the people that shop at the stores you complain about “they be loathe to transfer them into shelf pricing, due to the uncompetitive disadvantage” do not know about the fees? So are you saying that your people are drongos. I’d guess that they go to a cleaner, classier store and are willing to pay more for a not only a better experience but a superior product.
Dude, lay off the crack before you go on comment boards. Your responses are completely incoherent.
Irrespective of where in the world, no customer should be exposed to additional charges for paying with a debit or credit card. The majority of hotel and airline transaction s are undertaken in this way and hotels and airlines should include these costs in the rates charged, rather than annoying customers with extra charges
Did you even do a basic google search prior to whining? Interchange rates in NZ for premium VS and MC start at 2.1%, and that
doesn’t even count the processor charges and other fees that get tacked
on:
http://www.mastercard.com/nz/merchants/interchange-fees.html
http://www.visa.co.nz/aboutvisa/interchange/interchange.shtml
If you used an Amex Plat or Chase Sapphire or Barclays Arrival, etc, then chances are that 1.9% wouldn’t even begin to cover the fees the hotel paid on your transaction.
How on earth do you think VS, MC and Amex are able to offer rewards cards that pay 2% cashback, 2 miles per dollar etc? The interchange fees on those premium cards can easily top 3% and rarely go below 2% for most merchants.
Confused when a worldly person like you states “When I had a merchant account in Finland back in the 1990’s, the fee was 0.8% for swipe transactions and no other fees. A friend of mine who runs a restaurant in Spain is paying less than one percent.” You are ethier a liar or rode the short bus. They did not only charge a transaction fee but a additional fee on top of that. Go back to your oasis. You complain about free drinks from Marriott and then fees, what else does your whiney as female dog complain about? What are you complaining about exactly, besides the hated, ruthless, unsympathetic, ignorant, stupid, racist, et al, saviour of the world Americans. Is it unfair they do not have a, a.k.a swipe fee. Even with this guy you still cannot compete. In other words we rule the EU, not that means a damn thing. Heck England refuses to use the pathetic euro and will leave within 4 to 6 years. Why tie yourself to regulations. Don’t like credit card rates, wipe fees, interest rates, to many people at free drink hotel rates then pay cash. I have a sneaking feeling, you cannot only do this but make a habit on every stay or flight to your benefit. You always get something for nothing. You Whiny “BIT” Female “CH” Dog.