1.5% fee added to credit card charges?

We will be staying at the Westin Sydney for 5 nights between cruises and in the fine print it states that a 1.5% fee will be added to all accounts settled by credit card (the Sheraton also has the same fine print.) Is this credit card fee standard for all hotels in Sydney? Is it added on to credit card charges at other establishments in Sydney e.g. restaurants, zoos, harbor cruises? What about other cities in Australia?

Not everybody charges a credit card fee, although I find more hotels are now doing it. Using a debit card or EFPOS gets around this. Nearly everyone charges a fee for AMEX and Diners.

Edited April 15, 2014 by tygeray

In planning for my trip to NZ next fall, I've noticed many hotels charging extra to use a credit card. Air New Zealand charged me an extra fee to use a credit card to charge my flight ticket when I booked on line with them.

Go buy a $ 50 item of clothing on your credit card and the retailer charges no surcharge because you did not pay cash .

 

But buy anything associated with air travel or accommodation even if the purchase is $ 000's and the provider adds on an extra surcharge of 1 or 2 % . The bank charges a fee to the retailer for processing the transaction . Its called price gouging, and Aussies regard it as a rip off. Caveat Emptor Qantas are one of the worst offenders .

Edited April 15, 2014 by kuldalai

Its called price gouging, and Aussies regard it as a rip off. Caveat Emptor Qantas are one of the worst offenders .

 

Here it would not only be a rip-off, it would be illegal. Still, there aren't many other options (especially when costs are in the thousands, or on the internet), and when in Rome........

 

(FWIW, the flat fee charged by Air NZ worked out to be less the half a percent of the fare, but that's because it was a pricey fare.)

It used to be illegal and I cannot remember the justification for changing the law. I used to pay most things by credit card and got many frequent flyer points. Now it is not worth it because there is usually a surcharge on bills like electricity, rates etc. The surcharge often works out costing more than the gains.

But you should be able to pay by electronic transfer without a surcharge but I suppose there is a fee for doing that from an overseas account.

The terms for our hotel stated that there would be "a 2% credit card fee applies to payments made for bookings made online (excludes direct booking made via our own website). You may wish to change your payment choice on arrival to cash or EFTPOS to avoid the fee."

 

Considering how expensive the hotel rooms are this can add up quickly.

The bank charges a fee to the retailer for processing the transaction . Its called price gouging, and Aussies regard it as a rip off.

It used to be illegal and I cannot remember the justification for changing the law. I used to pay most things by credit card and got many frequent flyer points.

The justification for changing the position was that the credit card companies' requirement of single pricing imposed an anti-competitive restrictive practice on any merchant who wished to accept credit cards, which was intolerable given that today pretty much every merchant has to accept credit cards to stay in business.

 

Your credit card frequent flyer points are not free. They're paid for by the fee levied on the merchant by the credit card company, which can be up to 5% (but more commonly in the 1.5%-3% range). The credit card companies' single pricing requirement basically meant that in order to stay in business, the merchant had no alternative but to agree to hand over a significant part of his turnover to the credit card company whenever a customer chose to pay by card, entailing all the extra costs that involved.

 

If your gross profit margin is 10%, and you're paying 3% of the purchase price to the credit card company, that's a large chunk of your profit that you've just had to give up. And the credit card company then often rebates some of that fee to the card holder in the form of frequent flyer points and the like.

 

That's why the practice of requiring single pricing was banned in the UK, and I believe that it's the same reason in Australia. There certainly was price gouging going on - it was being carried out by the credit card companies on the merchants.

When we were in Australia and NZ earlier this year, every single hotel we stayed in (all 5 of them in 4 different cities) charged 1-2% for using a MC/Visa and 3% for using Amex.

 

Now that merchant agreements allow it, I have seen a few places here in the US start adding them in as well, but usually it is small mom and pop places that do it (or the large truck stops on the main interstate).

 

Of course there's also the 1-3% foreign transaction fee that some banks will charge if you use your card overseas, and the hidden fees if a merchant uses DCC (where they charge you in US dollars instead of the local currency) to contend with as well. Hopefully you've gotten yourself a good chip card with no FTF.

Your credit card frequent flyer points are not free. They're paid for by the fee levied on the merchant by the credit card company, which can be up to 5% (but more commonly in the 1.5%-3% range). The credit card companies' single pricing requirement basically meant that in order to stay in business, the merchant had no alternative but to agree to hand over a significant part of his turnover to the credit card company whenever a customer chose to pay by card, entailing all the extra costs that involved.

 

Right, but it really doesn't offer any options to those who aren't local and need to make a payment or deposit long-distance. That's the part that really bothers me - I'd be happy to pay even several hundred in cash, but I can't do that from 8000 miles away. It holds international customers hostage, knowing that there's no way around the surcharge. IMO it's bad business from a PR standpoint, but I guess they don't really care about my goodwill since I don't have any options.

Right, but it really doesn't offer any options to those who aren't local and need to make a payment or deposit long-distance. That's the part that really bothers me - I'd be happy to pay even several hundred in cash, but I can't do that from 8000 miles away. It holds international customers hostage, knowing that there's no way around the surcharge.

There may be places that charge a percentage for credit cards but don't charge (or charge only a small flat fee) for a debit card. That is a potential way around the percentage charge - and it could also let you exercise your market power by refusing to do business with merchants who charge a percentage for credit cards and debit cards alike.

 

But otherwise the fee is just part of the costs of doing business internationally. You'd have fees for sending a bank transfer, you'd have fees for exchanging your own currency for the local currency, and you have fees for using a credit card. Cross-border transactions cost money, and someone's got to pay for it. If you choose to use a credit card, then that payment may have to include reimbursing the merchant for your choice of payment method (ie a credit card). At least you may get some freebies rebated to you by your credit card company, like frequent flyer miles.

Credit card fees are a fact on modern day life in Australia. It is more than just airlines and hotels etc that impose a fee, typically 1.5-3.0%, on payments. Now utility providers, mechanics etc are in on the act - initially it was for the higher 'cost' cc providers like Amex & Diners Club, but now extends to Visa & MC.

 

The merchant/provider will say they are just recovering the costs charge by the cc company. When cc's first started here, accepting cc's without a surcharge was done to access business, but as now most businesses accept cc, there is not point of difference, and they almost all charge a fee now!

The only 'rule' seems to be that they must declare the charge ahead of time.

 

Despite the fee, many choose to use their card and pay it - it is not compulsory to pay be cc, but other options may be limited and at their own costs, as others have posted.

 

If you don't want to pay the fee, pay by other means, or don't use that merchant. The parctice is so common, some companies actually advertise "no credit card fees".

 

My motto - have MC, will travel :)

But otherwise the fee is just part of the costs of doing business internationally.

 

Yup, I don't like it, but if I want to visit NZ, that's what I'll pay. Doesn't change the fact that it sucks, though.

What about booking on a local site instead of the hotel site and pre-paying?

What about booking on a local site instead of the hotel site and pre-paying?

 

I would never buy an air ticket through anyone other than a travel agent or the airline itself -- there are too many weird conditions on air tickets. The airline ticket isn't prepaid, but I think you're talking about accommodation.

 

When it comes to accommodation, many "local" sites also require prepayment (it depends on what type of accommodation I'm looking for). I'm lucky that I'm traveling in November and not summer, so I might be able to arrange the accommodation I want at the last minute and not need to pre-plan. But, as I said, I'm going to do what I need to do anyway -- this is a $7000 or so vacation, so I'm not going to deny myself over an extra $50 in fees......even if I feel taken advantage of because of my international travel.

Edited April 16, 2014 by calliopecruiser

... but if I want to visit NZ, that's what I'll pay. Doesn't change the fact that it sucks, though.

But on that basis, travelling anywhere outside your home currency zone sucks. As soon as you're paying outside your country of origin, you're paying fees.

But on that basis, travelling anywhere outside your home currency zone sucks. As soon as you're paying outside your country of origin, you're paying fees.

 

It's the only place I've ever traveled that has this extra credit card fee - that sets it apart. Sure, I'm paying fees when I exchange money or pay in a different currency, but this is an ADDITIONAL fee on top of that, that is (in my experience of international travel) fairly unique. You make it sound like paying a fee is the same as paying multiple fees, LOL.

 

And in fact not all credit cards charge fees for international transactions; I'm considering whether it's worth getting one of those cards, or whether the down-sides make it not worthwhile.

It's the only place I've ever traveled that has this extra credit card fee - that sets it apart. Sure, I'm paying fees when I exchange money or pay in a different currency, but this is an ADDITIONAL fee on top of that, that is (in my experience of international travel) fairly unique.

Sorry, you need to look at the bigger picture. The addition of a credit card fee in countries that allow such fees does not mean that the product is necessarily more expensive in those countries when bought by credit card, or that the product would necessarily be cheaper if such fees were not allowed there.

 

The credit card fee is a fee on top of the cash price. In countries where charging a fee for credit card use is common (Aus and NZ are not the only such places), the cash price will generally be lower than the credit card price by something of the order of the amount of the fee. That's the point of allowing merchants to charge a fee - it means that cash as a payment method, with its lower costs, can compete fairly with the higher-cost credit card payment method.

 

If, in constrast, no credit card fees are allowed, the cash price has to be the same as the credit card price. Given the amount by which credit card fees eat into a mechant's profit margin (see above), you can be sure that the credit card fees will be taken into account when the single price is set. What usually happens is that you pay extra to the merchant if you pay by cash. The absence of a credit card fee doesn't mean that the product is cheaper.

 

So your complaint that you're paying more in total when you pay a fee for using a credit card is more a matter of perception than reality.

And in fact not all credit cards charge fees for international transactions; I'm considering whether it's worth getting one of those cards, or whether the down-sides make it not worthwhile.

If the card company doesn't charge currency conversion fees, there will be some other costs. Credit card companies aren't charities, and "no currency conversion fees" is a marketing device not a piece of altruism. So make sure you find out what the costs are, and how to avoid them (if you can).

Not everybody charges a credit card fee, although I find more hotels are now doing it. Using a debit card or EFPOS gets around this. Nearly everyone charges a fee for AMEX and Diners.

If you think 2 - 3 % surcharge is unfair, don't use your CC when paying your taxi fare. A 10% fee is charged in most states.:mad: Victoria (Melbourne) is now only 5%:eek:

Sorry, you need to look at the bigger picture. The addition of a credit card fee in countries that allow such fees does not mean that the product is necessarily more expensive in those countries when bought by credit card, or that the product would necessarily be cheaper if such fees were not allowed there.

 

I don't care if it's cheaper -- that's another argument. I'm talking about a specific additional charge that is unavoidable as an international traveler that could be avoided if I was a local. I feel gouged because I have no option other than to pay by credit card, and that makes me feel as if either they don't want my business or they want to gouge me.

 

........

 

So your complaint that you're paying more in total when you pay a fee for using a credit card is more a matter of perception than reality.

 

Yes, but it's your perception that is wrong -- that was never my complaint. I don't like being penalized for buying something over the internet from 8000 miles away when I have no other feasilble option.

 

If the card company doesn't charge currency conversion fees, there will be some other costs. Credit card companies aren't charities, and "no currency conversion fees" is a marketing device not a piece of altruism. So make sure you find out what the costs are, and how to avoid them (if you can).

 

Well, duh! Of course they're not charities or altruistic. Credit card companies make most of their money from interest payments on charges, and their interest rates are exhorbitant. However, if you pay your bill in full and on time, you don't need to worry about whether their interest rates are higher than someone else's.

 

 

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Edited April 17, 2014 by calliopecruiser
more typos

I don't care if it's cheaper -- that's another argument. I'm talking about a specific additional charge that is unavoidable as an international traveler that could be avoided if I was a local. I feel gouged because I have no option other than to pay by credit card, and that makes me feel as if either they don't want my business or they want to gouge me.

 

Yes, but it's your perception that is wrong -- that was never my complaint. I don't like being penalized for buying something over the internet from 8000 miles away when I have no other feasilble option.

If the merchant was not allowed to charge a fee for using a credit card, you would have paid the same amount as the that which you are now paying including the credit card fee. How is that being gouged or penalised, other than in your own perception?

 

The current price without the credit card fee is in effect a discount for cash payment. But you are not paying in cash. How is it reasonable to demand a discount for cash payment when you are not paying in cash?

You do not avoid the fees if you are a local. You are not being discriminated against for being in another country. The only way to avoid the fee on Jetstar, for example, is to have the booking put on hold and make a direct payment into their bank account by electronic banking (or use their own credit card I think) I always do it by direct payment for the specific reason of avoiding the additional credit card fee. In Australia electronic transfer is probably the main way of paying for many things these days and debit cards are growing in popularity compared to credit cards.

We do not especially like using our main credit card overseas as it also a debit card which will access our main accounts. We just went to Malaysia and I booked the flights on Expedia, accommodation mostly on booking.com, took cash and changed it there the first night in Kuala Lumpur and we barely used a credit card at all.

took cash and changed it there the first night in Kuala Lumpur and we barely used a credit card at all.

 

That may be what I end up doing in NZ - using primarily cash. I'm pretty sure I can use my debit card in ATMs there (as I have in Europe), but I don't know if I can use it at retailers. And then I don't know if they'll add a surcharge since it's not a EFTPOS debit card.

You do not avoid the fees if you are a local. You are not being discriminated against for being in another country.

 

Totally correct.

 

calliopecruiser, I trust you can see past this as it is much a do about literally nothing. If you are able to just lodge your cc to reserve your accom, which is often the case if you deal directly with the hotel, you will be able to pay in cash when you stay. At times though to secure the best rate, you need to pre-pay and use a cc or similar - so a better rate with just a little extra fee. Just imagine what would have had to happen say 50 years ago, before we had cc's.

 

The cc fee is declared up front, unlike when you book a hotel room in say USA and then are hit with bed tax, state tax,local tax etc etc.

 

If you intend to rent a car during your visit, please be aware there will be charges over and above the advertised daily rate & maybe a cc fee

 

Co-incidentally we are travelling to your country later this year - we are sure we will get 'surprise' costs, but what the heck, we will be in the Canadian Rockies:D

 

Happy cruising