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Qantas to charge 1% "fee" for credit card purchase. Wonder if this idea will spread?

Qantas to charge 1% "fee" for credit card purchase. Wonder if this idea will spread?

Old Feb 10, 03, 12:52 am
  #1  
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Qantas to charge 1% "fee" for credit card purchase. Wonder if this idea will spread?

http://afr.com/companies/2003/02/10/FFX0C4W9ZBD.html

Qantas defends surcharge on credit card payments

Feb 10 08:22
AAP

Qantas Airways Ltd on Monday defended the introduction of a flat one per cent surcharge on credit card payments as a nominal charge to help towards costs.

The surcharge is now allowable under reforms to the credit card system last year, to help businesses offset the extra cost of processing cards.

A Qantas spokesperson said the introduction of a surcharge followed on the Reserve Bank of Australia reforms surrounding credit cards last year.

The new RBA rules came into effect on January 1 and meant credit card users may be billed at the cash register for transaction fees charged to merchants by banks, and then passed on to customers.

"We have made a decision to include a flat nominal surcharge of one per cent for credit card transactions," the Qantas spokesperson said.

"We're still a couple of weeks off finalising the details.

"Qantas have been absorbing credit card merchant fees for some time and will continue to absorb some of the cost ... the surcharge really is a nominal amount," she said.

"We're going to continue to absorb some of the merchant costs, with the surcharge being one per cent."

The spokeswoman said customers could pay by a number of methods - including cash, cheque or retail offices with EFTPOS - for all Qantas fares except for internet specials which could only be paid via credit card.

Labor today said Qantas was profiteering by introducing a surcharge on credit cards but offering no discounts for cash.

Opposition finance spokesman Stephen Conroy said the government should immediately give the Australian Competition and Consumer Commission the power to supervise the reform of credit cards.

"Unless surveillance powers are granted to the ACCC, consumers will continue to be ripped off by the sort of big business profiteering we are now witnessing from Qantas," he said in a statement.

The Australian Consumer Association finance policy officer Catherine Wolthuizen said consumers were already paying towards credit card processing, as the cost was built into airfares and other prices paid.

"It will be double dipping, it will not only recovering the cost of processing card transactions from the prices we all pay, but also on top of that through this additional fee for its credit card customers," she told Sky News.

The report said Qantas rival Virgin Blue was looking at the credit card issue, with retailer Coles Myer Ltd also monitoring the situation.




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Old Feb 10, 03, 1:20 am
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Let's hope that MasterCard and VISA don't allow this in the USA. Currently, this practice is banned by both card networks. Exceptions exist, of course, like tax payments.
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Old Feb 10, 03, 2:18 am
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In Germany, the big three also do not allow this as well. I hope they will maintain their position.
I am not aware of any exceptions.
I know some shops try to it or try to at least ask for a minimal amount if you want to use your credit card but this is all inofficial and not authorised by the CC companies.
Needless to say, cards are by far not as widely accepted as in the U.S., especially because the CC fees are much higher here.
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Old Feb 10, 03, 5:40 am
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http://www.smh.com.au/articles/2003/...725674717.html

Qantas to bring in credit-card surcharge

By Geesche Jacobsen and AAP

February 10 2003

Qantas will become one of the first companies to charge customers for using credit cards to pay for their holidays.
The one-per-cent surcharge will start from the beginning of April, but would recoup less than half the transaction costs charged by banks, Qantas's marketing manager John Borghetti said yesterday.

The move has been allowed under Reserve Bank reforms which came into effect on January 1, allowing merchants the right to recover bank charges for credit card transactions.

In January Caltex announced it would allow its franchise operators to decide what credit card surcharge to charge their customers. However, Caltex-owned stores - less than five per cent of all Caltex service stations - would not charge a fee.

Virgin Blue was also considering a charge, but had not made a decision, a spokeswoman said last night.

Mr Borghetti said Qantas could not continue to absorb a broad range of charges imposed on it while domestic airfares were at a historic low.

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Old Feb 10, 03, 6:02 am
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by ozstamps:
'... The surcharge is now allowable under reforms to the credit card system last year, to help businesses offset the extra cost of processing cards ...'
</font>
What about the cost of processing cheques? How much will we pay for this?

Or for the cost of armed guards fro cash transporting? Maybe a cup of tea for the driver and a tinnie for the dog?

Sounds like a straight 1% increase ripoff to me.
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Old Feb 10, 03, 8:10 am
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Considering that most US airlines have closed their CTOs, it would be very hard to impose such a charge in the USA. However, nothing would suprise me these days...
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Old Feb 10, 03, 9:03 am
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I recently bought a 3-nite package tour from Sydney to Cairns from Qantas Tours. Instead of a credit card surcharge, they gave a 3% discount for cash (check). I paid by US $ check to my Travel Agent, and they in turn paid Qantas.
Don't know if this is "legal" in the US or not, but from my perspective, 3% is a significant discount.
Cairns (pronounced "cans" as in cans of tuna fish) was wonderful. The Qantas vacation package, including RT air SYD/CNS, a great hotel with ocean (actually a bay) view and large balcony, and tours for 2 days including the Great Barrier Reef, was excellent.
Qantas once again has competition in the Aussie domestic air market, including Virgin Blue.
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Old Feb 10, 03, 1:12 pm
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If this practice spread to other airlines, the next logical step would be for many industries to impose a surcharge.

We pay for the costs anyway in the product price. However, if the cost were higher for credit card users, I would pay by check or cash as much as I could.

I think consumers would, in general, use credit cards less and less. The credit card business better be careful or it will shoot itself in the foot.

I'm thinking that the major credit card issuers are smarter than this.

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Old Feb 10, 03, 1:17 pm
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Most "low cost" airlines in the UK already do this.

Most common charge is an additional 3GBP per booking. Debit cards which deduct the money from current/checking accounts have no fee imposed.

Also, most travel agents in the UK will charge a percentage fee on payments made by credit card. I think the norm is about 3% with a maximum of 20GBP.

Not a particularly nice practice - particularly when you want to use your credit card to earn FF miles.

Regards

Nick
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Old Feb 10, 03, 1:29 pm
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The reason that tax payments incur a surcharge is that the federal government made it illegal for the IRS to pay a % to a credit card company.

Official payments charges you a fee, and the credit card company takes a cut from them.

It's the only way the credit card companies could get a cut of the tax business.

QF is able to do this because.. who are they competing with?

US airlines can't do this because any one holdout will prevent implementation. If UA tried this but AA didn't, AA would get more business and UA would back off. Simple as that.

Competition will prevent this fee from taking hold in the US, I would guess. And if it didn't, I would make my call louder to allow foreign entrants into the US market. I bet Richard Branson would be willing to forgo a credit card transaction fee in exchange for US domestic rights....

[This message has been edited by gleff (edited 02-10-2003).]
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Old Feb 10, 03, 2:35 pm
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I would welcome this move in the US. Visa and MasterCard have tried to lock up the market and fight tooth and nails when merchants try to encourage customers to use other methods. If you want to see how evil the credit card companies are just look at some of the documents coming out from the lawsuit filed by WalMart.

If the airlines now charge you extra if you are overweight, have extra luggage, want to eat a meal or drink a glass of wine, what is the problem with the extra 1% fee.?
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Old Feb 10, 03, 2:38 pm
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I wouldn't be surprised if the credit card companies are trying to figure out a way to implement this. Very few people pay cash for tickets (a sure way to guarantee addditional attention from *security*), and since there's no payment alternative when booking on the web or by phone, it's a way to raise
much needed cash.
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Old Feb 10, 03, 2:50 pm
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You can always use your debit card---the fee is much less than a credit card.
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Old Feb 10, 03, 3:14 pm
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Why wouldn't people just resort to booking via telephone and paying by check?

You can purchase airline tickets with a voucher and mail in the voucher. Instead of paying a 1% ripoff fee, I'd just book by phone (which would cost the airlines more money due to the need for increased staffing to handle the booking & process the checks) and mail in a check.

Just like the airlines thought they would save the 5% travel agent commission by driving passengers to book via the internet but ended up losing revenue because now passengers are searching for cheaper fares over the internet. If the airlines think they will increase ticket revenue by 1% just by adding a surcharge, they better make sure that they aren't increasing their ticket processing costs by more than that 1%.
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Old Feb 10, 03, 4:30 pm
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People should get over it. People claimed that nobody would pay travel agents service fee's---guess what? --they are. There is talk of the airlines trying to pass the merchant fee back onto travel agents and KLM charges everyone in Holland 20-25 Euros to issue a ticket.

Down the road expect to pay more if you use a credit card, it you use a live person in the ticket booking or check in process and if you want to eat food on the flight.

If you think this can't happen over here then take a look at some of the no frill airlines in Europe that charge fee's if you pay be credit cards. People are still paying for their tickets with credit cards.

If you are really upsed about this, call your credit card company and ask them to lower their merchant fee's.
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