Cash, Credit and EFTPOS - Surcharges and Payment Restrictions

• 

  Hybroid on 20/02/2020 - 19:34

  -2

  Electronic processing charges exist. That slight extra fee doesn't make a difference to most of us, but can eat into small business' revenue. Pay cash if you want to avoid it. I haven't used anything apart from Apple Pay for ages.

• 

  JimmyF on 20/02/2020 - 20:16

  +2

  However I saw a small business with a surcharge for EFTPOS payments also

  That is correct, there is a flat fee for EFTPOS CHQ/SAV transactions, they are allowed to pass any fees on.

  Why are businesses and then consumers still being penalised for using electronic payments isn’t he year 2020?

  Because the banks charge fees on electronic payments and they are allowed to 'pass them' on to the consumer if that is your payment method of choice.

  Fees as a 'business' are

  EFTPOS CHQ/SAV - is 10c per transactions

  CR - Visa/MC is anything from 0.9% to 3% (or higher if using mobile EFTPOS terminals).

  Amex, well it starts at 3% last time I looked.

  There is normally a $20-30 fee per month per EFTPOS device as well.

  So….. Put it this way, if your employer said hey I can pay you in cash and you get 100% of your normal take home wage, you can then put it in the bank etc or I can pay the money into your bank account, but it'll cost you 2% if I do that.

  This is what is happening to businesses when you pay 'cashless'

  • 

    netjock on 20/02/2020 - 20:31

    +5

    2% was already baked into the price before surcharging mate. You don't think someone swallowed it by magic? I didn't see any prices come down, overnight the surcharge signs came up and prices still went up higher than inflation.

    • 

      JimmyF on 20/02/2020 - 21:42

      -1

      Not all places had 2% baked into the price. Lots of places didn't have have EFTPOS machines until the surcharge was allowed to be passed on.

      The simple fact is they are allowed to do it, so pay cash and save the credit card fees or don't, its up to you.

      • 

        netjock on 20/02/2020 - 23:19

        +2

        Which business world do you live in?

        So you say a petrol station would be selling petrol 2% less if they didn't have an eftpos machine? Did anyone get a 2% discount when Woolworths had an EFTPOS outage the other week? Lets do some googling

        Why would Myer sell an iphone for cash 2% less than Apple store when the most you could get for your 1 reward point per $1 on credit card is worth 1c?

        Just like if the Australian dollar went up 2% tomorrow vs USD Apple won't be lowering the cost of an iphone tomorrow, next week, next month, or next year.

  • 

    plmko on 20/02/2020 - 22:03

    It gets worse with Afterpay et al Fintech which charge ~4% and condition the shoppers to not use anything else.

    It's a good thing the RBA are smarted than the monkeys in the ACCC pushing for legal surcharges.

    • 

      netjock on 20/02/2020 - 23:20

      Harvey Norman 24 month interest free deals are the same. The credit provider gets a % of sale from Harvey Norman. Nobody can borrow money for 0% and hire people to provide a free service.

• 

  netjock on 20/02/2020 - 20:29

  +2

  Allow surcharging was to stop penalising those using cash, passing on true cost of accepting card. Turned out to be a money making idea for most small businesses.

  Given the time saved having employees skimming your cash, having to take it down to the bank to have it counted / deposited / risk of having large amount of cash robbed. Unless you turn over a lot of money (if you turn over millions you won't have staff walking down to the branch with $10k at a time), it is the safer alternative.

  Small businesses use it as a way to making you use cash for tax purposes.

  • 

    [Deactivated] on 20/02/2020 - 21:10

    +1

    Actually surcharging was always allowed but a few years back it was changed so that surcharging has to reflect the cost of acceptance (eg, if it costs the business 3% they can't charge 4%). I've not come across a business with a surcharge for eftpos for several years now. When I last did they had a minimum beyond which they had it baked into the prices, but low value transactions of a dollar or two kill businesses with reasonable prices and no surcharge, when that business removed the surcharge they upped all their prices by much more than the surcharge was.

    Some businesses have started realising the cost of dealing with cash and we'll no doubt see surcharges for cash soon enough.

    • 

      netjock on 20/02/2020 - 22:28

      +1

      It was merchant agreement you could not surcharge.

      Then RBA allowed to surcharge and the businesses went nuts with the rates. RBA stepped in again to only allow up to reasonable amount.

      A surcharge on cash. That is like small businesses putting a tax on their own tax avoidance.

      • 

        [Deactivated] on 20/02/2020 - 22:44

        It was merchant agreement you could not surcharge.

        Then RBA allowed to surcharge

        This doesn't make sense, merchant agreements prevented it? but the RBA made the change?

        There have been surcharges for more than 25 years? Are you talking about before then?

        The majority of businesses are honest, in a lot of places extremely few customers still use cash so avoidance would be minimal anyway. With cash it has to be counted, taken to the bank, exchanged for a float etc, then there's risks of it being stolen, employees pocketing it etc. There are plenty of business out there getting to the point where not dealing with cash at all would be preferable.

        • 

          netjock on 20/02/2020 - 23:09

          +1

          @[Deactivated]: Could you google and fact check first please? link

          2003 is not 25 years ago. I have no idea which universe time you are living on.

          Extracts:

          In February 2016, a law was passed banning excessive payment surcharges and providing the ACCC with new regulatory powers.

          In 2013, the RBA surcharge reforms specified that retailers could only charge customers for the “reasonable cost” of accepting electronic payment.

          These changes were introduced after RBA research from 2011 found that surcharges were typically 1% higher than the merchant service fee for Visa, Mastercard and American Express cards, and 1.9% higher for a Diners Club card. Airlines and taxi companies were widely seen as the biggest surcharge offenders, with the former often charging flat fees of between $5 and $10 per purchase, while Cabcharge applied a 10% “service fee” for credit card payments.

          Before 2013

          Page 13 first line: 2003: Prohibition on surcharging is lifted

          You have no idea what you have been talking about. I've been doing books and reading contracts for businesses including merchant card acceptance facilities and I can tell you if you don't like reading the above you are wrong. Sorry but you need to read more.

          Your last paragraph. Most businesses in Australia are small businesses and they are the biggest employers. I can guarantee you they all get a bit loose with the book keeping sometimes as a matter of convenience. That is why tax compliance is so hard, you can never get enough tax inspectors neither would it be economical to hit them for a few hundred missing in tax.

          • 

            [Deactivated] on 22/02/2020 - 19:42

            @netjock: Just so we're clear, there are people with credit cards now that were not born when surcharging was not allowed, and you talk about it as if it were yesterday? In any case, 25 years ago there was still plenty of 'pay less for cash' which is a surcharge by another name. There are people applying for credit cards now not born in 2003.

            But just to be clear about where the confusion was, when you said:

            It was merchant agreement you could not surcharge.

            Then RBA allowed to surcharge

            What happened was that the RBA disallowed surcharge restrictions in merchant agreements. Having seen that I understand what you meant, but it wasn't at all clear by what you wrote as it suggested the RBA had previously had restrictions in place, which they never did, even 25 years ago.

            The 2016 change is the only one most people will have in their living memory as it had a big effect. I've run a small business and seen the books of several others. For some being loose with the book keeping actually costs more than getting it right. A 'few hundred missing in tax' is a lot less than cash handling costs.

            • 

              netjock on 23/02/2020 - 00:10

              -2

              @[Deactivated]: People come up with the facts. You just give some flippant smart ass answers because you don't know how to Google.

              So apparently 2016 is all that matters. You wonder why human kind keeps on repeating the same mistakes.

              The difference is I've run books of companies making a few thousand in profits to companies turning over hundreds of billions with profits of billions.

              Your comment about a few hundred missing in tax vs cash handling costs. It is two different things between tax evasion and cost of doing business. Tax evasion you can get taken to court, if your cash handling costs fluctuate you don't get taken to court. In the latest wage under payment saga I can guarantee you no company has gone to the ATO saying: a few hundred in tax per employee is a lot less than the cost of actually getting it right.

              Truth is you don't know anything and just can't bear to be wrong. I don't expect an apology but trying to sly your way out of this is actually bad for you.

  • 

    JimmyF on 20/02/2020 - 21:45

    -1

    Small businesses use it as a way to making you use cash for tax purposes.

    and these 'savings' outway any of those negatives you claimed earlier, like counting the cash, and hehe depositing the cash into the bank etc.

    • 

      mskeggs on 21/02/2020 - 06:46

      Very much so.
      If you can pocket the GST and avoid 30% income tax, handling cash is a small burden.

      • 

        JimmyF on 21/02/2020 - 09:47

        If you can pocket the GST and avoid 30% income tax, handling cash is a small burden.

        Winner winner, chicken dinner….. But people here just don't understand that, hence the neg vote on the comment.

• 

  Seraphin7 on 21/02/2020 - 09:26

  +2

  The whole surcharging thing is just ridiculous … and, frankly, should just be outlawed. We all know that cash payments are declining rapidly and people now expect to be able to pay by card for everything.

  Businesses need to bake in the cost of surcharges to their cost model and adjust prices accordingly.

  I'm not actively avoiding businesses that apply card surcharges. I don't care if my cup of coffee next door is 10c more expensive, I just don't want to feel like I'm being nickel and dimed every morning.

  • 

    JimmyF on 21/02/2020 - 09:55

    We all know that cash payments are declining rapidly and people now expect to be able to pay by card for everything.

    Not expected, people are demanding 'cashless' payments as its not cool to carry a wallet around with cash in it.

    Businesses need to bake in the cost of surcharges to their cost model and adjust prices accordingly.

    Then people that pay cash get hurt…….

    The real question we should be asking, is why should it be the businesses adjusting, we should be looking into the entire cashless payment market. Why is it acceptable for banks to skim 1-3% of the top of EVERY cashless transaction? Its money for nothing!

    Why isn't every cashless transaction fee based, a fair example would be 5 cents for ones below $10, and say 10c for those above $10 under $50, and then 20 cents for those above $50?

    The entire % based fee is from the 'olden' days of manual credit card transactions, having to call up a call center to get a auth number, with the old slide credit card machine, and manual posting etc. It had a lot of overhead.

    I'm not actively avoiding businesses that apply card surcharges. I don't care if my cup of coffee next door is 10c more expensive, I just don't want to feel like I'm being nickel and dimed every morning.

    Then don't see it as a surcharge, see it has the total price.

    $4.50 coffee, with a 3% surcharge becomes a $4.64 coffee. So its a $4.64 coffee. Simple as that.

    • 

      Seraphin7 on 21/02/2020 - 10:11

      Not expected, people are demanding 'cashless' payments as its not cool to carry a wallet around with cash in it.

      Then people that pay cash get hurt

      People don't want to hear it, but there are always "winners and losers" in practically every decision. It would seem that harm minimisation would occur by having additional costs incurred by the smallest possible group.

      Why is it acceptable for banks to skim 1-3% of the top of EVERY cashless transaction? Its money for nothing!

      Other than the provision of the totality of the network necessary to make cashless payments work.

      Why isn't every cashless transaction fee based, a fair example would be 5 cents for ones below $10, and say 10c for those above $10 under $50, and then 20 cents for those above $50?

      What is your basis for these charges? Can you explain the underlying revenue and cost model that would enable this network to be provided for these costs to merchants?

      The entire % based fee is from the 'olden' days of manual credit card transactions, having to call up a call center to get a auth number, with the old slide credit card machine, and manual posting etc. It had a lot of overhead.

      I don't understand the logic here. Why would this model "require" a percentage-based fee, but the current model should only need fixed fees?

      $4.50 coffee, with a 3% surcharge becomes a $4.64 coffee. So its a $4.64 coffee. Simple as that.

      Agree, but this is where behavioural economics kicks in. I just want to be charged a flat $4.50, or $4.60, or $4.70 (to use prices around those you've quoted).

      Charging me $4.50 + $0.14 (especially when the card machine says $4.50 before you tap, but then magically turns to $4.64 once the approval comes through) just feels like a sting.

      Not everyone will respond in the way I do, but some percentage will … and they're the ones that will get their coffee next door at $4.70 and then give that merchant the opportunity to make sales beyond the daily coffee.

      • 

        JimmyF on 21/02/2020 - 10:48

        What is your basis for these charges? Can you explain the underlying revenue and cost model that would enable this network to be provided for these costs to merchants?

        CHQ/SAV transactions are done today for a FIXED FLAT FEE of 10c per transaction, regardless of value.

        Other than the provision of the totality of the network necessary to make cashless payments work.

        You mean the same network that does CHQ/SAV/CR transactions? One is a flat rate of 10c, the other is a % based fee. Hmmmmm

        EFTPOS CHQ/SAV needs a 'tap and go' card and its benefits pushed more to the consumer and business user.

        The simple fact is, credit cards charge 1-4% fee for handling the transaction and that includes those 'Visa Debit cards' that use your own money. It was the biggest scam by Visa/MC bring them in.

        All the benefits of a credit card, aka merchant fees, without any risk to them as it uses your own money instantly!

        • 

          Seraphin7 on 21/02/2020 - 13:10

          @JimmyF:

          You mean the same network that does CHQ/SAV/CR transactions?

          These are not the same networks. They ultimately provide very different services. We can argue the toss all day about whether one provides greater value for money than the other, but there is no dispute that the fundamental network and service are different.

          EFTPOS CHQ/SAV needs a 'tap and go' card and its benefits pushed more to the consumer and business user.

          Perhaps. Why haven't the EFTPOS people developed such a solution?

          All the benefits of a credit card, aka merchant fees, without any risk to them as it uses your own money instantly!

          "Tap and go" (and indeed "press CR and use your pin") on Visa/MC debit cards provides all the same services/protections as does using a credit card.

          • 

            JimmyF on 21/02/2020 - 15:03

            @Seraphin7:

            "Tap and go" (and indeed "press CR and use your pin") on Visa/MC debit cards provides all the same services/protections as does using a credit card.

            Ahhh yes the old ozbargain 'protection' of a chargeback hey?

            At the end of the day for day to day purchases credit card offers no real protection over 'cash', unless you're one of these people

            My lunch didn't taste right I demand a refund!! I'm doing a chargeback!

  • 

    Baysew on 21/02/2020 - 13:29

    Our business uses Tyro to process card transactions. -

    Tyro will process eligible payments through the cheapest network saving you money.

• 

  cuteseal on 21/02/2020 - 09:46

  +1

  Best one I saw the other day at a Korean restaurant:
  - Pay credit: 2% surcharge
  - Pay cash: 5% discount

  I wonder whether anyone has done any analysis on the true cost of banks providing credit vs cash.
  - Cash: bank tellers, ATM machines, physical storage of cash in vaults, physical transfer of cash, physical reconciliation of notes, loss due to physical damage or physical loss
  - Credit: eftpos machines, dealing with fraud, dealing with chargebacks, all the inter-bank reconciliation stuff

  I would have though the government would be doing more to incentivise people using electronic payments as opposed to cash.

  I recall there was a Planet Money podcast episode about a country (India?) switching literally overnight from a cash based society to a electronic, which brought a whole swag of benefits to the government - less fraud, more tax as everything can be tracked, less robberies, people's savings are safer (instead of being stuffed under a mattress).

  Found it:
  https://www.npr.org/sections/money/2017/05/10/527803742/epis…

  • 

    JimmyF on 21/02/2020 - 10:17

    I recall there was a Planet Money podcast episode about a country (India?) switching literally overnight from a cash based society to a electronic

    now now you're missing the KEY part of the changeover which was basically all cash became worthless overnight

    Prime Minister, Narendra Modi said, starting on November 9th, most of the country's paper money would no longer be legal tender. Everything over the equivalent a US $5 bill would become worthless pieces of paper.

    Same thing would happen in Australia or any other country for that matter if the government said anything larger than a $10AUD note or even $5AUD note, as $5USD is about $7.50AUD will have no value starting say 1st of May!