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For the Record: Credit Card Surcharge
Below is the City of Melville's response to a series of questions from a media outlet regarding the credit card surcharge involved when paying rates via credit card.
• A Meville ratepayer said she was charged an extra $11.66 processing fee when she paid her rates ($1515.50) by Visa.
Chief Executive Officer Dr Shayne Silcox said the credit card surcharge was 0.77 per cent (including GST), so the charge of $11.66 on rates of $1,515.50 was correct.
• Could you break down what "cut" the city gets and why the fees are so high?
“The credit card surcharge has been implemented to offset the bank fees associated with credit card payments made by ratepayers. It should be noted that bank fees for the above payment based on a normal credit card are as follows:
A standard fee for use of a credit card is 0.1164 per cent, so in this case a charge of $1.76 ($1,515.50 x 0.1164 per cent);
A Card Merchant Interchange fee (a charge made between banks, which is not normally publicised by the banks) of 0.4091 per cent, so in this case a charge of $6.20 ($1,515.50 x 0.4091 per cent). Note a higher Card Merchant Interchange fee (an average of 0.9 per cent) is charged for a premium card – such as a gold card which is quite common;
A processing cost per transaction, which is normally $4.50.
Therefore the cost of this transaction to the City of Melville was in fact $12.46 ($1.76 + $6.20 + $4.50) – which other residents cross-subsidise in this and other cases,” he said.
• And roughly how many people in the city have paid their rates by credit card?
“Not all rates have been paid to date so we are not in a position to estimate the percentage paid by credit card. It should be noted that not all ratepayers pay by credit card and therefore not all will be affected by this surcharge. The City of Melville also offers many alternative payment options which do not incur any payment fees,” he said.
“Previously those who did not pay via credit card completely subsidised those who did, which we have rectified in the budgetary process by passing on most of the bank charges that we are charged,” he said.
• We contacted the major banks and they said the fees were excessive
“It should be noted that most organisations now charge a credit card surcharge and the average charge is 0.77 per cent. We have received this information from the banks and other credit card providers,” he said.
Credit Card Surcharge