RBA Sets Its Eyes on Taxi Cards Surcharge

The Reserve Bank of Australia is eyeing taxi cards surcharges. If the RBA would have its way, it would remove the 10-percent surcharge imposed on taxi fares.

Last week, the RBA has issued stern warnings on how surcharging rules should be worded starting next year. The rules should explicitly indicate that these are applicable to the ‘taxi industry.’

Taxi fares usually impose a 10-percent surcharge on metered fares, booking fees, flag falls and GST. When aggregated, the surcharge totals at least 11 percent.

An inquiry was recently held to look into Victoria’s taxi industry. Allan Fels said as much as 50 percent of the surcharge was being paid to taxi drivers in rebates. The surcharge should be used for payment processing.

According to Fels, processing cost should be roughly about five percent of the entire transaction value. Fels was the chairman of the Australian Competition and Consumer Commission.

Starting March 2013, credit cards issuers can now insist retailers to place a limit on surcharges and ensure that these fall within reasonable costs. Some of the most popular credit card issuers include MasterCard, Visa and American Express.

In case of a dispute, credit card issuers can sue merchants and demand that they provide evidence of what reasonable costs constitute.

Fels said that the cost to business when they accept credit cards is between 0.87 percent to 1.84 percent only.