The cost of using your card for a taxi has been a point of contention between customers and transport companies for years.
But now there is some change in the air: the Victorian Government has announced major reforms for Victoria’s taxi industry, following a Taxi Industry inquiry led by Professor Allan Fels.
One of the key changes of these taxi reforms is a reduced credit and debit card surcharge, with the goal of halving the current 10% rate by the end of 2013.
Taxi Services Commission Chair Graeme Samuel said cutting the surcharge to 5% was a good place to start, hinting at the possibility of even further cuts in the future.
“We are looking forward to the process of implementing the reform package,” he said when the reforms were announced.
“We anticipate, very confidently, that customers will see the difference in the provision of taxi services and the quality of services, the quality of drivers over the ensuing months.”
So how much of a difference will this make for passengers in Victoria and, potentially, around Australia?
Firstly, let’s consider the cost of taxi travel as it stands, Details from the Australian Taxi Industry Association (ATIA) show that the average fare in Victoria is $22.
If you chose to pay with debit card, you would be charged an additional $2.20 for the service, taking the total up to $24.20. In other states the average fares and estimated surcharges are as follow:
- ACT: $21.05 average fare; $2.10 surcharge
- NSW: $24.15 average fare; $2.41 surcharge
- NT: $26 average fare; $2.60 surcharge
- QLD: $21.30 average fare; $2.30 surcharge
- SA: $21.10 average fare; $2.11 surcharge
Details for Tasmania and Western Australia were not available from the ATIA, but if they are comparable then you could expect to pay around $2 per debit card payment in these states.
Changing Card Surcharges For Taxis
The Taxi Industry inquiry conducted in 2012 found that surcharges cost customers $30 million each year.
It also found that around half of the surcharge went towards rebates for the drivers when it could have been used to make payment processing more affordable.
While Victoria is the first to announce changes, there are hopes that other states will follow suit.
Last year the Reserve Bank of Australia criticised the 10-11% surcharge imposed on card purchases, calling for change across the board.
If other states followed the same lines as Victoria, that would take the yearly cost of these surcharges to $15 million and save you around $1 for every taxi fare paid by card.
While that may not seem like a lot of money on it’s own, over a year it could really add up.
Tips For Saving Money On Surcharges
While taxis have been a particularly prominent target when it comes to debit card surcharges, they are not the only service that charges extra for the convenience of plastic.
Airlines have also copped a lot of flack for their card costs, with Qantas, JetStar, Tiger and Virgin all adding between $7 and $9 per person for domestic flights and up to $30 for international flights.
In some cases, particularly when airfares are on sale, these fees equate to a surcharge of over 17%.
But whether you are catching a taxi, booking a flight or shopping for clothes, here are a few tips you can keep in mind that may help you save money on surcharges:
- Get cash out: If you think you will be getting a taxi later or know there’s a store with a minimum on card purchases, finding your nearest ATM could help you avoid extra fees. Just make sure it is an ATM run by your bank so that your debit card doesn’t attract another charge.
- Check the conditions: Credit cards actually cost more to process than debit cards, so if you see a sign that there will be extra costs for payments you can check to see whether you will be saved the hassle buy using your debit card.
- Opt for online transfers: BPay, POLipay and PayPal are among the electronic payment options many businesses now use to offer customers a cheaper way to pay when card fees are charged.
Debit card surcharges can seem small enough for an individual transaction but they can just as easily add up to a lot of wasted money over the course of a year.
So being aware of the current costs and potential changes gives you a chance to save money whenever you can so that using your card doesn’t cost you any extra cents.