A retail advocacy group, Surcharge Free, is pledging to stop payment surcharging and calling on the government to tighten up surcharge regulation.
The RBA is expected to set new credit card surcharge limits this week, which will force companies like airlines and taxi providers (two of the worst offenders) to scale back credit card surcharges to Reserve Bank set standards.
“Efficient surcharging should reflect the cost to the merchant,” Malcolm Edey, assistant governor at the RBA said in a speech this month. “However, evidence of excessive surcharging in some industries has accumulated.”
This follows the Federal Government’s announcement earlier this year that it would be looking to target the worst surcharging offenders.
In the midst of these regulatory changes and general customer backlash, a collective of leading Australian retailers, business associations and advocates have joined forces to launch a new surcharge-free movement, which is urging businesses across the country to scrap payment surcharges.
Surcharge Free is designed to raise national awareness of the positive impact that not surcharging payments has on businesses.
“For as long as I can remember, consumers have been vocal about their negative feelings toward being charged extra simply because of how they’ve decided to pay,” said Surcharge Free spokesperson, Christopher Zinn.
“Surcharge Free encourages businesses to focus on the bigger picture of the customer experience. The reality is the damage caused by imposing a surcharge can far exceed the costs associated with processing card payments,” Zinn said.
The issue of surcharges is particularly relevant to online retailers, who face much higher levels of cart abandonment than traditional bricks-and-mortar retailers, and have to deal with shoppers who can more easily compare prices and walk away.
“For online and multichannel retailers — where there are limited payment options beyond card — not surcharging customers at the point of sale is critical in boosting loyalty, achieving repeat business, and ensuring online transactions are completed,” said Zinn.
“No-one likes an unexpected surcharge at the checkout, and it creates conflict at a stage of the customer journey that could see them go to a competitor that does not surcharge.”
The Iconic is one Australian retailer rallying behind Surcharge Free. Managing Director, Adam Jacobs, said: “Ensuring a superior and seamless experience at the point of sale is particularly important for online businesses. It’s much easier to walk away from making a purchase in the digital world compared to a bricks-and-mortar store. At THE ICONIC, we don’t want to have a stumbling block – like surcharging a card payment – at this stage in the customer journey as it could easily see them go elsewhere.”
Paul Spon-Smith, Founder and Chairman of Coco Republic, said: “For Coco Republic, our decision not to surcharge is part of the exceptional customer service we strive to deliver. The reality is that surcharging creates a point of negativity in the customer experience. We don’t believe it sends the right message and it is why we’re proud to be part of the Surcharge Free movement.”
While the RBA and Federal Government have made moves to cap payment surcharges, Zinn believes they haven’t gone far enough.
“Some businesses may perceive this as permission for them to surcharge, as long as they don’t do it excessively, failing to realise the consequences introducing a surcharge will have on their business,” he said.
Surcharge Free is backed by American Express and a collective of Australian retailers, business associations and advocates including the National Retail Association (NRA), Retail Doctor Group, Hair and Beauty Australia, The Iconic, Coco Republic, and more.
Ian Winterburn, CEO of the NRA, said: “Although the NRA respects the right of retailers to recoup legitimate operating costs, we strongly recommend they should be recovered as part of the total cost of the goods or service, like all other legitimate business overheads. Through Surcharge Free we aim to turn the tide on this outdated, regressive, and harmful business practice once and for all. Brands need to provide Australians with the experiences they deserve to remain relevant and competitive in the current market.”