Telstra to pass along credit card processing fees to customers

By Vanessa Tripodi

The importance of shopping around for the right credit card not only applies to finding yourself the best interest rate and the lowest annual fee, it is also important to be aware of the credit cards that charge additional fees for what are usually everyday transactions. This is because there are a number of credit card fees over which you have little control.

In July 2009, Telstra announced it would be introducing or changing fees for some payment methods that incur higher administration costs. Australian businesses such as electricity and phone companies have been including credit card processing fees as a percentage of their bills for several years now; Telstra is only the latest.

These changes will come into effect in September and include a new $2.20 administration fee for payments made in person or sent through the mail; payments made via American Express, Visa or MasterCard will be charged an extra 1 percent of the bill amount. Payments made using Diners Club will be charged an added 2 percent. This also means that if Telstra customers use their credit card to pay their bill in person, they will be charged the $2.20 administration fee plus the credit card surcharge. These planned credit card fee hikes are up from the current 0.69 percent charge for paying with American Express, Visa or MasterCard, and 1.68 percent for using a Diners Club card.

Every year, Telstra spends hundreds of millions of dollars on their payment processing systems; the new credit card and administration charges are set to save the company on the majority of those costs. The additional credit card and administration fees will not be charged to all customers -- those who are pensioners or who have a disability will be exempt. Telstra has also said it will remain aware of customers who are experiencing hardship. It also is encouraging customers with more than one Telstra service to combine their services to a single bill to avoid fees on each payment.

The convenience and added security of credit card payments can quickly be outweighed by the seemingly endless fees associated with credit card use. Not only are more service providers including credit card processing fees for bill payment, these credit card fees are also increasing. A Choice report shows a steady increase in late payment fees and over-limit fees for credit cards every year since 2000 from all of the big four banks.

Late payment and overdrawn credit card fees can easily be avoided by carefully monitoring your credit card usage, while credit card processing fees can be avoided by using online BPAY or direct debit options. You may miss out on your credit card reward points, but those credit card fees can really add up.

Article by Vanessa Tripodi

Published: July 30, 2009