It’s not just Retail that adds a surcharge: Queensland Dept. of Transport and Main Roads does that! And when one has to pay a fee of a hundred or so dollars, most people would opt for card - but that costs extra! Very unhappy with that - but what can one to do but pay! The next election is some time away.
Virtually all state government agencies surcharge for cards, not just Qld. Vic also offers alternatives to cards such as direct debit (bank) and Bpay…
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BPay through internet banking works fine for me. No added charges. Available for nearly every bill I need to pay.
As a consumer I’m also happy that I have the option to avoid paying a surcharge which includes paying cash over the counter (Qld) at a customer service centre or Australia Post. EFTPOS from a cheque or savings account is also fee free.
For paying bills whether government at all levels or to many private enterprises the practice of adding a surcharge is widely followed. For CC transactions there is an additional entity in the payment chain to compensate, plus for many those rewards points. Someone has to pay for them. The cost is built into the card fees.
OK we are all on board with the application of the surcharge, what are you doing about it. I have written to my federal member and asked for its removal by law. I have used this and other forums the same questions.
I can say that after 35 years of retail business, a 1% profit after all costs is pretty much the profit many small businesses will have over a year, so in many cases banks through surcharges are charging as much as a business makes. Its well documented, so take a look please.
Well you have me confused with your post. It is the businesses that apply surcharges on card use, not the banks.
The business will be charged as a fee for service to have a card processing facility with terminal and network. And up to the business whether they apply that cost of business into their pricing. Or add on a surcharge based on payment type.
Saying that the banks should be banned from applying surcharges is like saying that RSPs should be banned from charging one to connect to the Internet.
Gregr, sorry if I created confusion.
You are correct, it is a business that applies a surcharge which I believe should be banned. It should be just another part of the cost doing business, just as handling cash is.
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Yes. It is like the businesses are able to add a surcharge for whatever costs they incur. eg in the extreme, they could advertise a product for $x but when you go to buy it they also add $y for the labour that they incur in selling you the product. EFT charges are just part of the cost of doing business and the price paid should be inclusive of all the vendors’ costs.
This is the principle behind making GST inclusive in the retail price, of course. I have met Americans visiting Australia who are amazed that when they pay their hotel bill, there are no taxes to be added. Who wants a pricing regime like the Yanks have where it is expected that you tip the service staff so that the vendor does not have to include their full wages in the retail price and you pay sales taxes, which vary between the states, above the published retail price?
I also have the understanding that credit cards are good for businesses insofar as consumer spending is likely to be greater if a credit card is used instead of cash.
The exception being, of course, for some self employed trades people who prefer cash and will say so. Clearly, what does not go through a payments system may not be declared as taxable income. This is a case for decreasing the reliance of federal revenue on income tax but instead increasing the GST so as to catch revenue from such individuals. But that is for a separate thread, of course.
Isn’t this asking customers who choose to pay by EFTPOS or debit card (or Bpay for bills/accounts) to subsidise the higher cost to the business of customers choosing credit?
This subsidy would be even more significant for high value purchases $1,000’s. One customer’s choice of CC can turn into many points and a holiday. Another will have nothing in return for paying the same price.
How it is now or tomorrow, neither is best for every consumer?
Many people stopped, or massively reduced, the usage of cash at the start of the pandemic. Many of those people have not returned to using cash as they used to.
Some of us view it differently than others.
Look at it as the business having a choice in how much profit it should/needs to/wants to make per sales versus the troubles and costs of processing a transaction. Cash buyers put the onus on the business to spend time/money to keep track (assuming all cash transactions are in the books); for card transactions the cost is explicit in banking/processing fees. In either case there is a cost to the business and a business can deduct its input and operating expenditures from income taxes. As another posted card buyers spend more, and if so shouldn’t they be welcomed to use their cards sans ‘penalties’.
I would phrase it as ‘every sale is a good sale if it generates profitable income at the end of a day’. A consumer seeing 100% of the cost of a product (per the GST comments) allow 1:1 comparisons and thus a level playing field to decide where to shop. I present my money in one or another form - penalise me at your ‘peril’ because given a choice I’ll go elsewhere if you do me over with 1.3%+/- here and there.
What is a card these days?
I have a NAB branded Visa platinum credit card, and I have a Visa branded NAB debit card. Both look the same, but they work very differently.
The credit card uses the Visa network, and I would expect a business these days to charge me a reasonable surcharge to use it. That would be no more than 1.5%. I really only use it for online purchases.
The debit card uses the Eftpos network and is used for almost all day to day payments with tap and go, and I expect no business to charge me a surcharge to use it. As I have said before, I have encountered only one business that did that, and they no longer have me as a customer.
You can, although I never do, switch the debit card to a credit card by selecting ‘credit’ rather than ‘debit’ on the point of sale reader.
A surcharge is akin to tipping for service from some viewpoints. If you are a tipper think about it that you are tipping the ‘surcharge system’. If you are not a tipper, why expect to be forced to essentially tip? It moves the cost of business from the business to the customer in either case.
or by waving the debit card when it is always processed via the credit network.
If you use Paywave/Contactless for a debit card transaction, it is processed using the Visa/MasterCard network and merchant charges are typically no different to that for a credit card. Paywave/Contactless is a service offered by the credit companies, not EFTPOS, and comes with some of the ‘benefits’ usually associated with credit cards.
If one wishes to use the EFTPOS system, a card must be inserted/swiped and savings/cheque selected on the payment console.
Every payment method has costs and it is unlikely one would be subsidising the other.
This can be explained using profit margins. A business will have different profit margins on products or services they sell. If one uses the same analogy, one would say that since margins are different between products/services, then a customer buying one must be subsidising another buying a different product. This isn’t the case as a well operated business would set margins based on a range of factors associated with doing business. The overall margin for all products sold sets the dollar profit the business makes.
Likewise with fixed (such as account fees and rental where it is charged) and variable (percentage or fixed amount per transaction) merchant costs, these are/should be factored in the cost of doing business. A business could assign these costs as it sees fit against products/services it sells and margins on each product/service sold. No differently to the business assigning costs such as rent, electricity, labor etc which vary between products and services.
Clearly I must live in an alternate universe. Because I don’t get surcharges for debit card use.
Do you wave it, or put it into the slot?
Mostly paywave, but sometimes need to slot it. Cash advance needs the card to be inserted. Anything over $100 needs a pin.
This goes through the credit card payment system with businesses paying credit card merchant fees (around 1.5-2% is common).
This would go through EFTPOS payment system, providing savings or cheque is selected on the console. Select credit and the credit card payment system is used.
Currently you can’t get cash advances or withdrawals with a debit card issued by a credit card company. It is processed through EFTPOS transaction if cash withdrawal becomes part of the transaction. It will automatically change to an EFTPOS transaction with account type needing selection (savings/cheque) and pin.
For PayWave/Contactless through the credit card system. For EFTPOS pin is required for any amount. Not requiring pin for purchases <$100/$200 is one of the ‘benefits’ over EFTPOS.
In my experience as a trader that was certainly something that happened 40 years ago. Today people are more guarded and often use it to replace acsh, Sure some make mistakes, spend to the max and then cannot repay it. That is anoyher issue. My point is only based on the issue that business should not be able to add a surcharge at all.
Again…I do not use a credit card. I use a debit card from my bank. Debit goes through Eftpos, not the credit card company network.
Paywave, tap and go, whatever you want to call it, attracts no surcharges for me. And there is no requirement for a pin to be entered unless the total is greater than $100.
