One of the world's major credit card companies says merchant gouging on surcharges has become a widespread practice.

The Reserve Bank yesterday released a report that showed the use of credit card surcharges has been rising since reforms in 2003 which prevented card companies from stopping merchants passing on the costs of credit transactions.

The report also showed that some merchants are now charging customers much more in credit card surcharges than they are paying to the card companies in merchant fees.

Mastercard's head of strategy David Masters says there is no doubt some merchants are profiteering from their credit card surcharges, particularly in certain industries.

"I don't think there's any question about that, and any cardholder who has stepped into a taxi or tried to buy a flight online or book a hotel recently would see that particularly given the cost of accepting a Mastercard transaction - when you pay 10 per cent or you pay $7.70 for a $100 flight - there's no question that that is, that price, it's well above what that merchant pays for card acceptance," he told the ABC's AM program.

A Reserve Bank survey of consumers conducted last year found surcharges were more prevalent in online transactions, and online credit card surcharges tended to be about double those for physical retailers.

The RBA says this is probably because consumers do not have many other practical payment options online, compared with the ability to use cash or EFTPOS in stores.

The Reserve Bank figures also show a larger proportion of big businesses add surcharges, and their surcharges are often higher relative to the cost of the credit transactions to them.

Mr Masters says his company has also noticed this trend.

"There a number of merchants in this country who are taking, who have taken, what the Reserve Bank provided to them, which was intended originally to demonstrate transparency as to costs of accepting cards - there is no question that they are taking that and adding that as their bottom line in terms of using it as revenue, not as a cost recovery method," he added.

Christopher Zinn from consumer group Choice says many merchants do not notify consumers of credit card surcharges until the last possible moment.

"With a lot of e-commerce you go through the whole booking procedure, then find the surcharge right at the end and by that time people feel committed so pay up," he told Radio National's Breakfast program.

"It's really consumer resistance which keeps a lid on these things, if we just meekly keep paying them, they'll keep coming."

Fee cap

The Reserve Bank says it is considering a fee cap as one option to stop gouging by merchants.

The cap may limit any surcharge to the amount of fees charged to the merchant by the card companies, or otherwise link the maximum surcharge to the amount of those fees.

Mastercard says it supports that approach.

"We think that's the best way to allow us and the industry to police this," said Mr Masters.

"We're not a massive fan anywhere in the world of surcharging, but we think in Australia it's got to the point where it is very clearly and demonstrably increasing the cost that consumers pay at the point of sale."

Choice also says a cap is worth looking at, but may have some unintended consequences.

"If you make a cap, whatever amount it is, that basically gives the green light for many more industries who are waiting in the wings we might say, that we know from surveys are very keen to bring in surcharges, I think many more surcharges would be brought in," Christopher Zinn explained.

"So its worth looking at, but it might actually just lower the bar for more people to actually start surcharging."

The Reserve Bank is taking submissions from interested parties before it comes to a decision on the best course of action.