CREDIT card surcharges that gouge hundreds of millions of dollars a year from consumers’ pockets would be banned under a proposed shake-up of the banking system.

Jetstar’s $8.50 fee for people to pay for a domestic flight on a credit card, Cabcharge’s 5 per cent slug and ­Telstra’s “2 per cent plus GST” grab would all be outlawed if the Reserve Bank of Australia accepts the recommendations made in the Financial Service Inquiry report, to be released by Treasurer Joe Hockey on Sunday.

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The inquiry’s head, former Commonwealth Bank chief David Murray, is understood to have called for a ban on all outrageous surcharges on ­credit and debit card transactions.

Instead, retailers would be able to pass on only the very small cost of administering the payments. This would be limited to 12c or 0.5 per cent of the transaction value, whichever is less. Visa and MasterCard back the abolition of excessive surcharges.

If accepted by the Reserve Bank, the recommendations would save some consumers hundreds of dollars every year.

media_camera A look at how the ban will save consumers.

The move would mean Flight Centre would not be able to demand customers hand over another 3 per cent of the total cost of their holiday just for paying for it with a credit card.

Ticketmaster and Ticketek would not be able to hit customers with a slug of up to 1.95 per cent on top of the price of concert tickets. And airlines would have to scrap their card ­surcharges of between $7 and $8.50.

No official figures exist for what Australians pay in surcharges, but in its submission to the inquiry MasterCard — which called for the surcharges to be scrapped — estimated the average Australian pays $130 a year in surcharges, ­totalling $1.6 billion.

Telstra charges up to 2 per cent plus GST for customers to pay their bills using credit cards. Cabcharge levies 5 per cent for Victorian taxi users to pay by plastic, and the fee is 10 per cent in all other states.

The airlines are the main ­offenders, with Jetstar and Tigerair charging an $8.50 “booking and service fee’’ for a domestic one-way flight paid for by credit card. Virgin charges $7.70 for a one-way domestic flight, while Qantas charges $7.

A Reserve Bank survey in November last year found that only about 4.1 per cent of all card transactions attracted a surcharge. Some 7 per cent of credit card transactions were hit with surcharges, and about 2 per cent of debit card transactions.

While supermarkets tended not to levy surcharges against customers, 15 per cent of all household bills paid by credit cards attracted a surcharge.

The Murray inquiry is a far-reaching look at Australia’s banking and finance systems and is set to recommend major regulatory reforms. The Government will call for further submissions following the release of the report, then hand down its response next year.

Mr Hockey told the Herald Sun the inquiry was “essentially a health check for our financial systems’’ which would boost productivity and growth.

“The last serious look at our financial system was the Wallis Report in 1997. The landscape has changed dramatically in that time,‘’ he said.

Mr Hockey added that the inquiry would establish a blueprint for the financial system over the next decade.

“Several of the inquiry’s recommendations, including those on bank regulatory capital and the payments system, are for APRA and the RBA to consider as independent regulators,” he said.

“A major focus is consumer protection. We need to make sure Australians are as well ­informed as possible so they can make the right choices.’’

ellen.whinnett@news.com.au