Qantas hikes credit card booking fee for business, first class flyers

Still better than Virgin Australia fees if you try and book on partner airlines like Etihad. 

Why is it outrageous? 

Qantas works in a hyper-competitive market - a market where certain customer segments display different levels of price elasticity. It's also a market where CC fees on transactions have become the norm (not saying I agree with it, just saying it is the norm). 

If a hard cost of processing airfares is a merchant fee of 1.5% then why not recover the actual cost? 

You should also realise that 1.5% of fare is actually pretty generous of Qantas - the customers buying these types of fares are likely to be using premium cards like AMEX Centurion etc - these all attract higher merchant fees - often well over 2%. 

The system is the issue...not the carrier...

Large organisations are able to negotiate fees of around 0.6-0.7% for Visa/MC and around 1% for Amex. This is simply Qantas gouging.

Agreed Rahul,

I used to consult to First Data - I'm aware of the system. 

What you need to keep in mind is that many of these transactions will come via Premium cards, where the payment gateway vendors have less ability to discount. 

Again...its the system at fault, not Qantas

Where did 1.5% come from? The article says 1.3%.

Hmm, I was probably multi-tasking at the time and "saw" 1.5% vs "what is" 1.3%

#mybad!

Hi Nalin, Qantas doesn't charge credit card fees on 'Classic Reward' bookings (now and also won't from September). Fees apply if you do a 'Points Plus Pay' booking, however.

But will it impact on the taxes you pay by credit card on a FF ticket?

They are adding fees to point plus play?

There were no fees on these bookings before. Points+pay bookings forced a credit card payment for the cash part (no other payment option selectable when points involved) and came with no card payment fee.

if my experience of the food and beverage on qantas first and business is any guide the answer has to be yes they are trying to push customers away, Joyce will only be happy once there are no happy customers left.

I just goi back from UK this week on BA first class, its light years ahead of Qantas and much more affordable.

Using Cathay, Singapore, Emirates, Qatar, Ethiad etc as examples of great premium airlines...  fair enough. But to use BA as a shining light, the airline that charges to choose your seat in business, really?

Good plan 'A333'. I usually search online and then take the quote to Flight Centre and ask for a price match.

Although I always start the process saying I'm not paying for using my American Express card. Works most of the time.

OTA's that are AU based are reuired by law to display prices including all charges so you'd be quoted including the fee because it's incorporated into the overall cost. 

Required*

I agree, and the date of introduction aligns to the published date from the RBA for 'large merchants'.

For the full RBA article:

https://www.rba.gov.au/payments-and-infrastructure/review-of-card-payments-regulation/q-and-a/card-payments-regulation-qa-conclusions-paper.html

I think you'll find the investigation effectively showed that people buying cheaper tickets (ie economy/domestic etc) and paying the flat $30 fee, were subsidising people buying premium tickets and paying the $30 fee.

The changes to a perecentage system are fairer on those people. 

Whether QF should charge the fee at all is another question.. surely better to just include it in the cost.

But as a predominate economy flyer when paying, these changes are a positive for me.

Richard    My wife and I travel business class too as my wife needs a lie flat seat on anything over 2 hours .We have retired .We dont use a credit card and pay our tickets by cash at Flight Centre.                                                                                            

Shhhhhh... 

airlines generally pay a higher merchant fee given associated risks.. they wouldn't be paying 0.5% and certainly not on amex or Diners cards

You'll find that Caltex actually surcharges 2.5% for American Express and Diners card transactions at all locations run by Caltex (Calstores), even those that participate in the Woolies deal. Those that don't surcharge are the ones run by Woolworths directly.

Whilst I agree with your sentiment, I think it's naive to think woolworths etc don't charge their customers. They would just recover this "cost" through the pricing of products, rather than at the til. 

Personally, I would prefer QF to just factor this into the fare. 

Fair point 'Hutch'. I too would prefer the airline to just incorporate it into the fare. 

This isn't that hard to understand:

1. Not all cards are the same - they all have different merchant and settlement fees
2. Not all merchant fees are the same
3. Not all countries have the same fees or interchange rules
4. Historically, Qantas has (as best I can tell) applied the surcharge as a blended fee - smoothing out differences between card types and gateway vendor demands
5. The RBA has demanded vendors charge a fee closer to the real cost of service provision
6. Economy or price conscious customers are more likely to purchase airfares using vanilla credit cards
7. Premium customers are more likely to purchase J and F fares using Premium cards - Premium cards attract higher merchant fees; premium cards comprise (probably) less than 15% of overall CC sales for Qantas (i.e. less negotiating power). 

'5. The RBA demands the fee be the REAL cost.' 

Whether you're a private passenger or a corporate passenger, the processing cost for a purchase of something for $100, $1000, or $20,000 is the same.   As has already been stated,  this is just a gouge, a rort, a ripoff, and all the other similar adjectives you can think of.

Frank,

Let me repeat this for the second time - premium cards attract higher merchant fees. 

• If you purchase a $100 Qantas fare with a vanilla MasterCard Qantas might pay 0.7% as a merchant fee;
• If I purchase the same $100 Qantas fare with an AMEX Centurion charge card Qantas might pay 1.8% as a merchant fee. 

Mark - I do understand  the 'merchant fee' varies by card, however the 'transaction fee' charged by FDR for their networking behind the scenes is as I stated before,  no more or less for transactions of any particular  value.

its not the processing cost - a merchant will pay more in fees on a $20,000 transaction that a $1000.. so no it's not the same cost. the more you put through a CC faciity the more the merchant pays

Did you really write "vanilla"? 

Huh? Surely you can work this out for yourself?

1.3% of an economy ticket is going to be less that 1.3% (or $70 capped) of a business or first ticket.

I agree with the travel around Asia and Australia etc... 

But I would think that a large number of passengers flying QF for business, would be booked through corporate schemes...

If that was true, they would most likely just leave the current system until next year... there are more economy seats on a plane and they are currently charging $30 a pop (international) for that.

Yep I was waiting to see who would say it first... But since this is an ACCC ruling it will most likely be applied to all A/L's in the end... OZ already does this. It's not going to take long for the rest to jump onboard with this idea. 

DHB,

Maybe do a bit more research into how credit cards transactions are processed in Australia because this assertion you've made is wrong: 

"the Reserve Bank in Australia, told the Australian Govt to implement a tax which will be collected by the banking system and do so as a percentage which can be slowly increased in increments on a go forward basis which will appear to be of no consiquence to your average citizen"  

The RBA was involved in the fee review started by the ACCC because the ACCC was investigating business practices (its core responsibility) whilst the RBA got involved because it related to payment systems - oversight of such is one of its two core responsibilities. 

There is no secret Government conspiracy to level secret taxes on the poor

thehound   Could you please explain that when I go to the bank and get $100 of change and the bank charge me $100  not $103 or $105 as you  say above. 

rufusfly

The points made by thehound are quite relevant though the comparison as presented may be too simplistic. 

The best way to look at this is to look at the total cost of accepting payment by payment type. 

The total cost of accepting a payment type such as cash will include factors such as:

• Time cost to go and get the float
• Time cost to manage various floats in cash registers inc compliance, physical cash management, and lower through-put of customers
• Time cost to reconcile floats at end of shift or end of day, time cost to then securly store or bank such cash
• Increased insurance and security costs due to being primarily a cash payment business

So to go back to TH's example and your response - yes you can withdraw $100 from the bank and the cost is (apparently) nil, when you look at this from a TCoB it is not nil. 

Conversly, if you operate a cashless and/or a contactless business (i.e. tap and go) then you face not only merchant fees to process payments so you get your money, but also higher insurance costs due to the increased risk of fraud. You would also factor in a loss factor per $100 of turnover because for basic card fraud you as the seller of the goods wears the cost of the refund, a penalty fee applied by your bank, plus the loss of inventory. As an example, in my e-commerce business I factor in a $ loss for every $1,000 of turnover to account for unrecoverables. This changes year on year for example as we've managed to avoid fraud for a number of years and our merchant now waives any penalty fees if we get caught in the future - so theoretically, my cost to accept credit cards has reduced slightly. 

markpy .   I am only a simple butcher that has retired .The time it takes to get the float and put it in the till takes less then one smoke. It only takes a few minutes to count the till each night.I still think it is quicker to serve someone that is paying cash .At the end of the day  you just had to put your takings in the night safe at the bank on your way to the pub.To  SIMPLISTIC  ?

rufusfly, yes your example is too simplistic...

markpy         If I follow your logic I would have been Bankrupt in a short time.With the merchant fees to process payments so I can get my money.Higher Insurance cost due to  fraud. Factor in $100 of   turnover because  of basic card fruad.Penalty fees applied by the bank.Plus loss of inventory.I notice that you factor in a $  loss for every $1000 of turnover to account for unrecoverbles.If you run your business simplisticly you dont have your problem.

The point of my earlier response was to expand on what thehound had noted which you had summarily dismissed. 

IF, as you seem to indicate, you operate a single till, low turn over retail shop then clearly your cost of accepting cash vs card would be "material" - as you note. 

As it stands, many of us operating in either a pure e-commerce business or a multi-till B&M business - the situation is more complex...which is the point I was making

markpk.     I did not dismiss the thehound..  I just wanted to know how cash was dearer .I did not Indicate  what sort of shop it was .It could be a  retail/ wholesale business that serves  hotels and restaurants.As for low turnover I think you are way off the markpk .

rufusfly,

You did state:" I am only a simple butcher that has retired .The time it takes to get the float and put it in the till takes less then one smoke." 

What I concluded from this was that you may have operated a small, single till butchers shop. If so, then your cost to accept cash as a payment method will come at a cost - its certainly not zero. 

To my earlier point, any type of business - simple or complex - will have a cost to accept payment whether that payment is via trading account, cash, EFT, or card - there is a cost. 

DHB

So if I follow your logic...

1. First Data Corporation provide the vast majority of payment processing, switching, and settlement services in Australia. They are a US public company. They provide a complex service for which banks and merchants pay them a fee.
2. Xero is a NZ public company that provides accounting software in the cloud - for which customers pay a monthly subscription fee to access their IP

So Xero and First Data both charge a fee for their services so therefore both are in fact collecting "tax masquarading as a fee" - your words! 

The RBA does not set law - one of its two jobs is to protect the integrity of the payments system in Australia. 

See: Five ways to avoid the Qantas credit card booking surcharge