Mastercard Generic pictures - Credit cards
Mastercard Generic pictures - Credit cards

Water Corporation customers using Visa and MasterCards to pay their bills are subsidising the lavish incentive schemes offered to holders of cards such as American Express.

Under the little-known practice of "blending", companies charge a single transaction fee for all credit card payments despite it costing significantly less to process some cards compared with others.

More than six months after the Reserve Bank warned businesses to separate the different fees, the Water Corporation has conceded it has yet to follow the edict.

The failure means corporation customers using Visa and MasterCards, which incur relatively low transaction fees, will continue to help foot the bill for often vastly more expensive types.

American Express cards, for example, have a transaction fee up to three times higher than Visa cards, with the money used to fund the provider's generous incentives program.

The State-owned Water Corporation has raised $2.6 million from credit card fees since the levy was introduced in February 2011.

It collected $1.4 million from the fee in the 12 months to June 30 last year. In both cases, the amounts were more than 10 per cent above what it cost the corporation to process the transactions, although the utility said the fee was supposed to be revenue neutral.

Electricity retailer Synergy, also owned by the Government, confirmed it had stopped charging a single fee for credit card payments and moved to a varying fee structure on January 1.

Synergy said it had raised $6.35 million between September 2009 and last November - a figure it said was "in line" with the costs incurred over the same period.

Explaining its failure to unwind the various credit card fees, the Water Corporation said it was not bound by the Reserve's June proclamation, which it described as a "guideline".

The West Australian

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