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Related to the question of whether a merchant can charge you more if you want to use a credit card, I'm wondering if this is a common practice in Australia (and if the question I just linked to is country specific)?

We received a hotel bill that gives us the option to pay via credit card or wire transfer but states clearly that using a credit card will incur a 1.5% transaction fee. I can't imagine a hotel in the US doing this.

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Generally most businesses will not, but it's not uncommon. Not sure about other countries, but in Australia merchants here generally have to pay VISA or Mastercard a commission if the consumer chooses to use credit. So even if they don't levy a charge, they may have a minimum purchase amount which you can use credit cards for.

Amongst some of the ones who do include...

Pretty much all of the budget airlines like (Virgin) airlines. I think there's been some outrage with them cause they charge $4.50 per person per trip which in some cases is greater than the transaction cost they have to pay to the credit card companies.

Aldi Supermarket link

they're kind of a budget supermarket. You got to pay for shopping bags and also charge 1% more for credit card.

On a side note, we also have a thing called EFTPOS here (http://en.wikipedia.org/wiki/EFTPOS) which is a debit card network. I think this network charges less commission because generally, a lof of businesses that charge for credit may not charge for EFTPOS. I also feel EFTPOS is also more secure as it requires a pin number, unlike a credit card which requires a signature.

  • Many credit card issuers give you a pin now. I think (cite needed) you may get stronger fraud protection on a credit card too. – poolie Aug 18 '11 at 6:59
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Yes, merchants may charge a fee for using a credit card.

For a credit card transaction, interchange fees flow from the merchant to the card issuer. This is why Australians are seeing a boom in "Debit" MasterCard/VISA cards - the issuing banks make income when you select "Credit". These costs can be passed from the merchant to the customer as a "Credit Card Fee".

For an EFTPOS transaction, the interchange flows the other way, from the card issuer to the acquiring bank (The merchant's bank).

As an aside, the setup of these fees is why some large supermarket chains in Australia restrict you from selecting "Credit" with a scheme debit card (MasterCard and VISA are 'schemes'). They are 'acquirers' in the payments networks and they make interchange fees when you hit "Savings" and pay if you hit "Credit" - therefore where you can hit either "Credit" or "Savings" they prefer (and may force) you to press "Savings".

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recently there has been an increase in Companies charging a Credit Card surcharge, the current law does not fix the amount so therefore company's can set there own surcharges, which means you can pay different surcharges at different places. In the "Money" magazine a couple of months ago there was an interesting article that discussed a possible cap that was going to be introduced to cut down on the fluctuations of Credit Card surcharges as some places are generating revenue by abusing the Credit Card surcharge.

Something to keep in mind is to ensure when using a Debit card you are not charged the surcharge. some businesses will treat the Debit card the same as a Credit Card.

  • Hi Adam, welcome to Money.Stackexchange.com! Can you add a more specific reference to Money magazine (like an issue number and an article title) to the question? – C. Ross Nov 8 '12 at 19:51
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Lots of places in the US do it. Although the way that they usually phrase it is 'prices reflect a x.x% discount for cash' since most of the credit card companies have an agreement that says you cannot charge a surcharge if someone is using a credit card. So they get around it by giving a discount for cash. effect is the same, but it skirts the letter of the agreement

  • Yup! That was made clear on the answer I linked to a long time ago. Just wondering about Australia. – Michael Pryor Aug 1 '11 at 22:40
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Here is a simple answer:

Most merchants do not charge customers, but you can.

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It is not only merchants that charge for credit card purchases but also service providers. Have you looked at your phone bill lately and even your Council Rates. Most of them charge a small %, usually about 1% on Matercard and Visa, and closer to 2% on Diners, Amex and American Express cards. However, the merchants and service providers that do charge a fee for credit card use, must also provide alternative ways of paying to their customers, so that the customer has the choice to either pay or avoid paying this fee.

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