Someone is doing well out of this scam. Why should the customer lose money out of the transaction? The business should be able to claim these costs as business expenses.
It’s another example that demonstrates it is time that surcharges were abolished and card fees became part of a business’s expenses. We must be at the point where staff and security costs for handling cash from the moment it is accepted till it is banked outweigh card fees anyway.
As i’ve only used cards for the last few years, I discovered a huge stash of $100 notes in a cupboard at home. On the weekend I decided i’ll start using them instead of cards just in case they start adding a surcharge to use cash. At the first restaurant I visited, they were expecting a card payment, but I produced a $100 note. The guy gave me my change and off I went. When I got home and put the money away, I found he had given me too much (which was satisfying). Must be out of practice in cash handling.
Some point of sale platforms don’t refund surcharges when a transaction is reversed. This is a relatively recent policy change and some business possibly don’t know of this change.
Example is Square where - ‘When you refund a payment, your customer is refunded for their full payment amount, but the processing fees for the payment are not refunded.’
When a seller reverses a past transaction/charge, it reverses the original transaction without any surcharges which may have been added. This is a POS provider issue, not a business issue.
While it may be possible in some cases, the owners of the business pays for the cost of surcharge out of their own pockets, where an added surcharge isn’t reversed by the POS provider. It comes off the total income they make, less any applicable taxes.
The only reduction is the tax which would have otherwise been paid if the transaction was dealt with as a profit. This could be that the sell is hit with 100% of the cost (where a seller’s income tax rate in 0% and they aren’t registered for GST). Often it is thought that it doesn’t cost the business as it can be classed as a expense - this is a myth.
Edit: The other issue is that some non-bank POS systems now apply surcharge after the transaction is processed by the merchant, so the merchant (seller) doesn’t know how much surcharge has been applied. As they don’t know how much is applied, there is no way to know how much should have also been refunded.
Not sure how you have jumped from a 30c surcharge not refunded on a $20 deposit, to thousands of dollars a year. If one hired the boat under the same security deposit conditions every day, you could get to $109.50 per annum.
which follows from the premise and has nothing to do with the $20 or refunding deposits, other than the aggregated surcharges add up.
$250 → routine spend on such things as cafes, many F&V, butchers, leisure, etc, etc.
Well then you are just stating the obvious. That the costs of card surcharges add up over a year. The cost of interest on CC use can add up over a year unless balances are cleared every month. Obvious too.
Why confuse that with an issue about a $20 refund?
Just read the RBA statement on surcharges. A service provider/retailer may apply a surcharge to any method of payment (provided it does not exceed the cost of accepting the payment AND the customer must be advised that a surcharge will be applied) BUT there must be one surcharge free method of payment available to the customer - for instance if a surcharge is applied to credit card transaction then cash payment should be fee free.
That surcharge free method does not have to be cash. And there is nothing to stop a business from applying a surcharge to cash payment if they can demonstrate what that cost is.
Eftpos is pretty much universally surcharge free in my experience.
My point exactly - if you read what I said, I made the point that the RBA advice is that a surcharge can be applied to any method of payment so long as there is one surcharge free means of payment. EFTPOS is mostly surcharge free, but for how long?
That is what you wrote. Eftpos is not a credit card transaction, and nothing says that a cash payment should be fee free.
Nor that EFTPOS should be surcharge free - retailers choose for it to be “free” for now, but given that there are cost associated with terminals, internet connections, interbank charges, etc, they are within their rights, given current legislation, to apply a surcharge. My observation, at the outset, was that the RBA states that a surcharge can be applied to any form of payment provided there is one surcharge free means of payment available - end of comment!
That was true up Eltham way a few years ago but today most local small businesses have a flat surcharge for any payment other than cash, $0.30 to $0.50 rather than a percentage being common reflecting their typical sale is probably in the $5-30 range. How that fits into them demonstrating their costs is opaque but my guess is they all use a processor that signed them up for a flat rate per transaction so all must be good in their world. Those without the flat rate vary from a percentage (most) to none (increasingly few, now mostly Colesworths, Bunnings, auto parts, wine & liquor shops, and servos).
Interesting to see that this is an issue in the USA as well. From a US newspaper today…
" A new law requiring New York businesses to clearly display the total cost of purchasing items with a credit card — including any surcharges — is in full swing."
Refer: New York's new credit card surcharge law is in effect
Interestingly, though, the new law does not apply to debit cards.
Not that we could tell how much anything was going to cost anyway when they added taxes (and tips) to most things we purchased.
How can it be justified that a business can charge a percentage fee surcharge for a transaction.
Surely the costs of processing a $10 transaction are the same as for a $1000 transaction?
Not if it’s cash. It takes us longer to count it and bag it and there’s more to have carted off to the bank.
For the merchant or the payment services provider EG Square, Visa etc?
I was thinking about electronic payments (Credit / Debit cards).
A 1% fee on $10 is 10c, on $1000 it $10.
How can the same payment type transaction cost 10 times as much?
Correction - it’s 100x times more for $1000 than $10
How?
Because merchant fees are percentages on the total value of the sale. This is how card issuing companies make their money and pay for the services they provide.
If it was a fixed price method, one might find that the fees associated with a $10 transaction are proportionally high compared to say a $1000 transaction. Say that the average purchase was $100 and fixed fees were based on 1% of $100. This would mean that for a $10 or $1000 transaction, the fee would be $1. If a business decides to pass on this fixed merchant fee, would significantly disadvantage those within the community which make smaller transactions. These are likely to be the elderly and low socioeconomic individuals. It would also impact on those businesses which have smaller transaction amounts. Such business would be forced to pass on the transaction fees as they would become a significant cost to the business. Neither is in the interest of consumers.
The current charges are a user pays type system. The more you spend, the more one pays for the costs of the service being provided. It isn’t any different to paying for water use, toll roads etc.
