No credit given to Qantas and Tiger

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This was published 14 years ago

No credit given to Qantas and Tiger

By Daniella Miletic

FEES charged by airlines to process credit card payments are excessive and disproportionate to the cost of the transactions, according to a damning new report that singles out Qantas and Tiger Airways for charging consumers too much.

A study by consumer group Choice says credit card booking fees, particularly for consumers buying discount domestic flights, are too high because most airlines charge a flat fee per passenger per flight instead of a percentage of the total transaction.

Qantas charges credit card holders $7.70 per passenger for domestic flights and $25 for overseas flights. Tiger charges a ''convenience fee'' of $6 per passenger per flight.

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''The airlines are really stand-out examples of where they fix charges at a far higher rate than the cost that they face,'' Choice spokesman Christopher Zinn said.

A passenger on a fare costing $200 may have to pay Qantas up to 3½ times the average cost for merchants to process such a transaction, Mr Zinn said.

He added a family of four travelling from Sydney to Melbourne return paying with one credit card would fork out $30.80 with Qantas or $48 with Tiger.

Choice argues the fees are disproportionate to the falling cost to merchants for processing or accepting credit card transactions. According to Reserve Bank figures, merchant fees for Bankcard, MasterCard and Visa were 0.89 per cent of purchase value at June 2009 - down from 1.43 per cent in June 2003 and 0.97 per cent in June 2005.

The Choice report said competing airlines also had high surcharges - but not as high as Qantas or Tiger. Jetstar charges $3 per sector per passenger for domestic flights and $5 per sector per passenger for international flights. Virgin Blue charges $3.50 per passenger per flight for domestic trips, and $6 per passenger per flight for international trips. These fees apply to Visa, MasterCard, American Express and Diners Club transactions.

Qantas and Tiger Airways defended their charges yesterday.

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''We believe our approach is straightforward and have standardised the fees to provide transparency and to ensure customers are always aware of what the additional cost will be where they use a credit card,'' a Qantas spokesman said.

The company said its collections were lower than the costs it incurred by accepting credit cards and that most credit card sales had ''higher than average merchant service fees''.

Both airlines said they offered consumers alternative payment options. Tiger Airways' Steve Burns said the fee covered costs including fraud prevention and bad debt. He added some fares offered by the airline were exempt from the credit card charge.

But some credit card providers yesterday questioned whether falling card costs where being passed on. ''We are concerned that some retailers appear to be imposing excessive surcharges on customers, and we have raised this matter with the Reserve Bank,'' Visa's Chris Clark said.

A Mastercard spokesman said that despite cost of a card transaction typically being 1 per cent of the transaction, ''we regularly see surcharging of up to 10 per cent''.

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