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Credit card surcharges attract competition watchdog's attention

Tuesday 12th January 2010

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Retailers who charge customers extra for using credit cards need to inform them up-front about such charges or they could face investigation by the country's competition watchdog, the Commerce Commission.

Surcharges have made news headlines in recent days after motorists complained that they were being confronted with a charge of as much as 3.5 cents a litre when using a credit card to pay for petrol at some service stations.

The practice is not illegal, and is a direct result of a Commerce Commission clampdown last year which stopped a credit card company ban on retailers charging such extra fees for credit card use - a practice the card issuers hate because it discourages card use.

However, the commission intimated in a statement this afternoon that retailers imposing surcharges could be breaching the Fair Trading Act if they fail to inform customers adequately that such fees will be charged.

Even more seriously, if retailers agree amongst themselves about what rates of surcharge to impose, they could be charged with anti-competitive conduct under the Commerce Act.

"The Commission will be watching developments to ensure that the long-term interests of consumers are being served," the commission's senior counsel Peter Taylor said in a statement issued this afternoon.

"As retailers now have the ability to pass the cost of credit card acceptance directly to the card-holder, pressure can be brought to bear on credit card issuers to reduce their transaction fees. This should over time result in decreased costs to credit card users while benefitting retailers and their customers through reduced costs,” said Mr Taylor.

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