Qantas impost on credit cards
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Qantas impost on credit cards
Sat "Sydney Morning Herald"
Qantas impost on credit cards
By Anthony Hughes
June 28 2003
Qantas will defy public opinion and push ahead from next week with a plan to levy an extra charge on customers who use credit cards to pay for flights, the first major negative consumer outcome from the Reserve Bank of Australia's credit card reforms.
Merchants have been free to surcharge since January, but Qantas will be the first major merchant/retailer to implement surcharging on Visas and MasterCards (other than the taxi industry).
Confirmation yesterday that Qantas would charge an extra 1per cent for flights paid by credit from July 1 coincided with the final day of hearings in Visa and MasterCard's Federal Court battle to overturn the Reserve Bank's reforms.
Justice Brian Tamberlin did not indicate when he might hand down his judgement, but has previously indicated a desire to hand down a judgement within a few months.
Qantas is taking advantage of one of the three central bank reforms - that which allows merchant to surcharge customers who use credit and outlawing the no-surcharge rules that were previously insisted upon by Visa and MasterCard.
The other two reforms slice the wholesale interchange fees charged by banks and open access to the card schemes to non-bank providers, but surcharging is the most obvious reform for the average consumer.
A spokesman for Visa said yesterday that it had surveyed 13,000 Qantas customers in March and found that 90 per cent disapproved of such a change and three out of four would think less of the airline. About 60 per cent would consider flying with another airline.
"We obviously oppose surcharging. It's a key tenet of our scheme," the spokesman said.
"The issue is there is no cap or set limit. There is no oversight by the Australian Competition and Consumer Commission. They have said all along it's too hard and the RBA said they are not interested in that as well."
Qantas announced in February that surcharging would be introduced in April, but for unexplained reasons has delayed the introduction of the reforms until next month.
It justified the move because it claimed it could not absorb a "a broad range of charges on its business when domestic fares are at historic lows".
The Reserve Bank believes the payments system will be more transparent if retailers can recover the cost of offering credit from credit card holders, rather than defraying the cost across all consumers.
The financial services policy officer of the Australian Consumer Association, Catherine Wolthuizen, accused Qantas of "double-dipping" to recoup its merchant services fees paid to banks, but blamed the lack of regulatory monitoring of fees for the move.
"[Qantas] have the market share to do it. It's certainly what the reforms envisaged, although the disappointing element is they are not lowering the portion of the airfares that already pays for the merchant service fees," Ms Wolthuizen said.
"It's simply double-dipping on the cost recovery on the merchant service fee and there's no regulatory monitoring for preventing that."
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Qantas impost on credit cards
By Anthony Hughes
June 28 2003
Qantas will defy public opinion and push ahead from next week with a plan to levy an extra charge on customers who use credit cards to pay for flights, the first major negative consumer outcome from the Reserve Bank of Australia's credit card reforms.
Merchants have been free to surcharge since January, but Qantas will be the first major merchant/retailer to implement surcharging on Visas and MasterCards (other than the taxi industry).
Confirmation yesterday that Qantas would charge an extra 1per cent for flights paid by credit from July 1 coincided with the final day of hearings in Visa and MasterCard's Federal Court battle to overturn the Reserve Bank's reforms.
Justice Brian Tamberlin did not indicate when he might hand down his judgement, but has previously indicated a desire to hand down a judgement within a few months.
Qantas is taking advantage of one of the three central bank reforms - that which allows merchant to surcharge customers who use credit and outlawing the no-surcharge rules that were previously insisted upon by Visa and MasterCard.
The other two reforms slice the wholesale interchange fees charged by banks and open access to the card schemes to non-bank providers, but surcharging is the most obvious reform for the average consumer.
A spokesman for Visa said yesterday that it had surveyed 13,000 Qantas customers in March and found that 90 per cent disapproved of such a change and three out of four would think less of the airline. About 60 per cent would consider flying with another airline.
"We obviously oppose surcharging. It's a key tenet of our scheme," the spokesman said.
"The issue is there is no cap or set limit. There is no oversight by the Australian Competition and Consumer Commission. They have said all along it's too hard and the RBA said they are not interested in that as well."
Qantas announced in February that surcharging would be introduced in April, but for unexplained reasons has delayed the introduction of the reforms until next month.
It justified the move because it claimed it could not absorb a "a broad range of charges on its business when domestic fares are at historic lows".
The Reserve Bank believes the payments system will be more transparent if retailers can recover the cost of offering credit from credit card holders, rather than defraying the cost across all consumers.
The financial services policy officer of the Australian Consumer Association, Catherine Wolthuizen, accused Qantas of "double-dipping" to recoup its merchant services fees paid to banks, but blamed the lack of regulatory monitoring of fees for the move.
"[Qantas] have the market share to do it. It's certainly what the reforms envisaged, although the disappointing element is they are not lowering the portion of the airfares that already pays for the merchant service fees," Ms Wolthuizen said.
"It's simply double-dipping on the cost recovery on the merchant service fee and there's no regulatory monitoring for preventing that."
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Bl**dy typical of QF to slug us all again.
Next we will have to pay extra to be given a paper copy of your boarding pass, or there will be a fee for the headsets. (which hardly work first time anyway)
Next we will have to pay extra to be given a paper copy of your boarding pass, or there will be a fee for the headsets. (which hardly work first time anyway)
Moderator
Merchant fees are a real thorn in the side for all business. IMHO it is only a matter of time before this becomes much more widespread.
Many customers like to use credit cards to get the loyalty points, but this actually means that the merchants have to put up their prices across the board so the people who pay by debit cards or cash are subsidising the credit card users.
IF QF are charging a 1% surcharge, then that is probably around half of their actual surcharge, so it seems to me that they are quite fairly splitting the cost of using the cards between themselves and the credit card using customer. I say good on them, because one outcome might be that less people use credit cards and then the banks might have to look at dropping thier merchant fees, and we will all be better off in the long run(except them and who cares about them anyway)
And if people don't like it then they can pay by some other means.
Many customers like to use credit cards to get the loyalty points, but this actually means that the merchants have to put up their prices across the board so the people who pay by debit cards or cash are subsidising the credit card users.
IF QF are charging a 1% surcharge, then that is probably around half of their actual surcharge, so it seems to me that they are quite fairly splitting the cost of using the cards between themselves and the credit card using customer. I say good on them, because one outcome might be that less people use credit cards and then the banks might have to look at dropping thier merchant fees, and we will all be better off in the long run(except them and who cares about them anyway)
And if people don't like it then they can pay by some other means.
The Reverend
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Qantas are stupid. They timed this to coincide with the removal of the $10 Ansett levy, thinking nobody will complain about a 1% surcharge. However, I'm standing by for the next Virgin billboard saying all credit cards welcome, no surcharge levied.
Last edited by HotDog; 29th Jun 2003 at 10:04.
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The reality is Qantas ARE increasing charges for their customers. Any retailer / provider of services, you care to speak to would admit that the cost of payment by credit cards is already factored into the prices they quote, hence the ability one has to bargain effectively when cash is offered as payment.
Finally, who on earth pays for an airfare by cash or cheque these days, especially with the proliferation of user accessed web based fares and e-tickets. In fact the automated self check-in kiosks that Qantas now have use credit cards as one means of identifying you.
Once again Qantas are taking unfair advantage of their market share.
Fark
Finally, who on earth pays for an airfare by cash or cheque these days, especially with the proliferation of user accessed web based fares and e-tickets. In fact the automated self check-in kiosks that Qantas now have use credit cards as one means of identifying you.
Once again Qantas are taking unfair advantage of their market share.
Fark
niknak
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Sorry chaps, but you're lucky you've got away with it for this long.
In Europe, nearly all the airlines, especially the low cost ones, will pass on the credit card/ bank debit surcharge to the customer, with credit cards it's an average of 3% and with bank debit cards it's usually a flat fee of around £1.
And why shouldn't they?
In other sectors, such as major supermarkets, the retailer tells you that they pay the commission themselves, but in reality, the costs are spread over the store so that you don't notice.
Like it or not, its pure business practice.
In Europe, nearly all the airlines, especially the low cost ones, will pass on the credit card/ bank debit surcharge to the customer, with credit cards it's an average of 3% and with bank debit cards it's usually a flat fee of around £1.
And why shouldn't they?
In other sectors, such as major supermarkets, the retailer tells you that they pay the commission themselves, but in reality, the costs are spread over the store so that you don't notice.
Like it or not, its pure business practice.
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A couple of points,
1. Hotdog, I believe the Ansett levy was $10, not 10%.
2. I thought, and I could be wrong!!
, that transaction fees were less than $10, in the vicinity of $3 or $4 ...
3. 1% of the fare.... now that is rude. If you have no other choice than to buy a more expensive ticket because of the need to travel, then you pay more for the privilege of buying the more expensive ticket AND paying by credit card!
4. It would be fairer for Qantas to say, 'This is the way it works, thanks to bankers, and the fee will be $XX.' Then everyone pays the SAME price for using a credit card, regardless of which fare structure is purchased.
5. What is their current practice? I guess they apply a surcharge to all tickets. Will this be taken off the fare price now, with only the customers paying by credit card charged accordingly?? I THINK NOT!
6. What will this do to internet sales?? No other option than to pay by credit card...
Its not so bad for city folk who can go and catch a Virgin flight, but in the country there is no choice ... Thanks again Qantas..
My 1cent worth of rantings
JetRacer
edited for grammatical errors and to add more rantings
1. Hotdog, I believe the Ansett levy was $10, not 10%.
2. I thought, and I could be wrong!!
, that transaction fees were less than $10, in the vicinity of $3 or $4 ...3. 1% of the fare.... now that is rude. If you have no other choice than to buy a more expensive ticket because of the need to travel, then you pay more for the privilege of buying the more expensive ticket AND paying by credit card!
4. It would be fairer for Qantas to say, 'This is the way it works, thanks to bankers, and the fee will be $XX.' Then everyone pays the SAME price for using a credit card, regardless of which fare structure is purchased.
5. What is their current practice? I guess they apply a surcharge to all tickets. Will this be taken off the fare price now, with only the customers paying by credit card charged accordingly?? I THINK NOT!
6. What will this do to internet sales?? No other option than to pay by credit card...
Its not so bad for city folk who can go and catch a Virgin flight, but in the country there is no choice ... Thanks again Qantas..
My 1cent worth of rantings
JetRacer
edited for grammatical errors and to add more rantings
Last edited by JetRacer; 29th Jun 2003 at 07:56.
