Credit cards are not the only non cash payment method

There is a common misconception that credit cards are the only way to make a non-cash payment and that as long as you pay your bill on time credit cards are free. Along with the myth that the average Australian family has four people in it, this may be increasing the cost of fuel in Australia.

The NRMA President was recently reported as opposing credit card fees on petrol purchases:

"Given the high price of petrol and the profits that are being made by oil companies to then charge motorists for filling up their tank, people are not going to carry the level of cash you need now to fill up their car ...".

Credit card companies charge the merchant for transactions. In Australia it has been common for the cost to be absorbed by the merchant, so that other purchasers subsidize credit card users.

Other non-cash payment methods, such as debit cards and EFTpos are cheaper than credit cards. I discovered this some years ago when preparing a report for the Australian Government on "Internet Payments for Government Agencies".

In a presentation I gave about the report there was a row of people in dark suits in at the front cheering me along. Afterwards they introduced themselves as being from the Reserve Bank of Australia. They were running campaign to make credit card fees more visible so consumers know what they are paying for.

The NRMA should be encouraging motorists to look at using other forms of payment besides credit cards. The NRMA should also declare its financial interest in credit cards and acknowledge that it refuses to accept any other form of payment some services.

Apart from costing more, credit cards make it easier to spend more. A better way to reduce the cost of fuel, is to use less of it. The average Australian family has fewer than four people in it. A small car designed to carry four people in comfort and safety will consume half the fuel of a large car. Assuming fuel was $1.40 a litre, the average family would save about $50 on each tank on of fuel, by switching to a small car.