Credit Card Surchage - Are you changing your method of payment?

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Forums › Finance and wealth management › Credit Card Surchage - Are you changing your method of payment?

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264 posts

Ultimate Geek

#3397982 29-Jul-2025 11:41

In Australia Eftpos charges a merchant fee of 0.2% vs 0% in NZ. Someone had to pay to develop a contactless eftpos system as @coffeebaron suggested.

Handsomedan

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#3397995 29-Jul-2025 12:16

Handle9:

If you don’t understand how interchange fees work perhaps you could find out? It’s really not that hard to get a basic understanding before making blanket statements that are demonstrably wrong.

There's so much uninformed and patently false rhetoric with regard to card fees, MSF, interchange and costs.

It doesn't take much reading to realise that there are a lot of costs borne by the issuers/acquirers and network operators that would that have to be charged for as in any business.
Retailers don't sell their wares for free and neither do their wholesale suppliers. Why should anyone in the payments industry do that? Is it because banks are evil and should provide their services for free as a charity?

EFTPOS in NZ costs the participants (Banks/Networks) a small fortune to operate and maintain - and it is provided free, as a service. Other countries do not offer this. Retailers don't pay MSF for EFTPOS, but they still have to rent a terminal to provide EFTPOS payment options - why don't they surcharge for that?

The numbers that the Retail Assn, etc throw about as the "normal cost of accepting cards" is so often wildly overstated.
Also - I don't believe as a consumer I should have to pay a surcharge to cover your costs as a retailer - it should be baked into the cost, irrespective of the payment method I choose. If I am unable to use Credit Card or contactless payments because the retailer has no Credit/Contactless facility then that's OK - I'll pay by EFTPOS if I have my wallet, or leave and abandon my purchases if I only have contactless payment methods.

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johno1234

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#3398010 29-Jul-2025 12:27

jjnz1:

coffeebaron:

Yep and that's the issue. If the EFTPOS system had upgraded to a contactless compatible system way back when contactless first came out, we would not be here today. But I guess since they make way more money clipping the ticket via the credit card system (that all contactless payments work through), there is no incentive to upgrade the EFTPOS system. I'd say many retailers will just drop credit cards / contactless payments and go back to purely swipe & insert EFTPOS if this goes through.

Yeah, that is a big risk IMO. For me I don't actually mind the current model of paying a percentage for convenience, especially because I don't carry around a wallet but instead only have my phone with Paywave.

I have walked out of cafe's and dairy's before, simply because I only had Paywave. (before I had ordered something). Funny enough, fast forward 6 months, and those same establishments now have Paywave.

I guess I support lowering the cards fees due to principle. I assume Visa/Mastercard are like big oil/ big pharma, and abusing their duopoly.

I'm the same - don't carry a wallet or cards around and use my phone (or would use a watch if I had one) for payments. If a vendor has no paywave then they get no business from me. That's getting quite rare now though.

cddt

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#3398047 29-Jul-2025 14:21

jjnz1:

Does anyone else see a massive risk here that retailers (dairy's for example) will just turn off the ability to pay via credit card and paywave?

Would that be a problem though? People would just use EFTPOS, which has much greater penetration anyway, and there would be less money heading offshore to multinationals...

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mattwnz

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#3398053 29-Jul-2025 14:33

johno1234:

jjnz1:

I guess I support lowering the cards fees due to principle. I assume Visa/Mastercard are like big oil/ big pharma, and abusing their duopoly.

I'm the same - don't carry a wallet or cards around and use my phone (or would use a watch if I had one) for payments. If a vendor has no paywave then they get no business from me. That's getting quite rare now though.

That is what a lot of people now seem to do, especially in the younger generations. I personally use my watch to pay. I don't really mind the fee being there for that but wouldn't pay extra for it. But should all customers be subsidising your convenience and choice with it being baked into the product price? If it does get baked into the product price, then more people will use it IMO which could make eftpos and cash less attractive, especially as people get rewards and cashbacks using credit cards. My issue is that paying by paywave by debit card seems to get charged the same fee as when paying by credit card using paywave, even though a debit card is more like eftpos, where you are using your own money and not borrowing.

mattwnz

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#3398057 29-Jul-2025 14:53

Handsomedan:

EFTPOS in NZ costs the participants (Banks/Networks) a small fortune to operate and maintain - and it is provided free, as a service. Other countries do not offer this. Retailers don't pay MSF for EFTPOS, but they still have to rent a terminal to provide EFTPOS payment options - why don't they surcharge for that?

Why do you think that is?. Do you work in the industry?

I am guessing that the cost for retailers to operate a normal eftpos terminal is the equivalent or lower than having to manage more people paying by cash and the costs associated with that, and eftpos tends to be a fixed fee, rather than a % of the transaction. But if people pay by eftpos they often aren't borrowing money to buy the goods, as the money is deducted from their bank account, and maybe that results in less sales for retailers.

mattwnz

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#3398058 29-Jul-2025 15:01

Asteros:

In Australia Eftpos charges a merchant fee of 0.2% vs 0% in NZ. Someone had to pay to develop a contactless eftpos system as @coffeebaron suggested.

Then how is it current system being paid for in NZ, which also had to be developed initially? It has been this way for decades and seems to work fine at a low cost for consumers. I recall BNZ, which back in the 80's was largely government owned largely developed it. So maybe the government / reserve bank needs to get involved in developing something more modern to replace it with with contactless payments. I think they are already looking at some for of digital currency.

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Asteros

264 posts

Ultimate Geek

#3398059 29-Jul-2025 15:19

Yes that's right someone has to pay for contactless EFTPOS to be developed in NZ. In your suggestion the Government will pay for it.

pdh

343 posts

Ultimate Geek

#3398060 29-Jul-2025 15:28

I don't understand the outrage over 'user pays' for Paywave and CC fees charged by Retailers & Service outlets.

You could (with equal validity) demand that customer toilets, parking and sales-advice be charged separately... Not everyone needs those costly add-ons.

I would like to see more outcry about the duopoly and the profit margin achieved in offering these financial services. Aside from the aspect of fraud insurance, these are transactional services - why aren't they charged at some cents per transaction - not some % of transaction.

I used to be charged (by my bank) 10 or 15 cents per check or electronic transaction - and this practice of cents-per-transaction was common (still is AFAIK) in the commercial world of EDI.

For those commenting on overseas practice - my travel over the past few years into Canada, US, Mexico and the UK, France & S Africa did not encounter any instances of add-on financial-service fees at the till (only gratuity or local sales taxes). I don't use Paywave but I did use a mix of NZ CC and country-local debit cards to pay. Perhaps my memory is worse than I thought...

Handsomedan

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#3398062 29-Jul-2025 15:31

mattwnz:

Asteros:

In Australia Eftpos charges a merchant fee of 0.2% vs 0% in NZ. Someone had to pay to develop a contactless eftpos system as @coffeebaron suggested.

Then how is it current system being paid for in NZ, which also had to be developed initially? It has been this way for decades and seems to work fine at a low cost for consumers. I recall BNZ, which back in the 80's was largely government owned largely developed it. So maybe the government / reserve bank needs to get involved in developing something more modern to replace it with with contactless payments. I think they are already looking at some for of digital currency.

BNZ was the first to operate an EFTPOS system in NZ - but it was only at Shell stations. It then expanded and gained widespread adoption throughout the country.
By 1989, the four major banks formed Electronic Transaction Services Limited (ETSL), which was rebranded as Paymark, then after its sale a few years ago was rebranded to Worldline.
They continue to operate as the major "switch" in NZ. They operate the proprietary debit network, otherwise known as the EFTPOS newtwork (although EFTPOS actually means electronic card payments in general).
EFTPOS was and continues to be paid for at the cost of millions of dollars by the participants in the network. There is no Merchant Service Fee to recover the millions and milions of dollars that have been spent developing and maintaining the EFTPOS network.
With nothing but constant cost, why would anyone sink money into developing the EFTPOS network beyond its current capability? Adding Contactless payments and credit card acceptance via non-scheme rails would simply be a cost for no benefit. Can't think of a single good reason for any business to do something like that.

Contactless payments and Credit Card payments are routed via the scheme rails (i.e. Visa and MasterCard) and are subject to Merchant Service Fees.
A bit of light reading/Googling will lead you to the actual interchange rates (publicly available).

Visa Contactless interchange is 0.65% for standard cards, 0.80% for Platinum/Premium cards
Debit Card interchange is 0.20%.

That's not a massive amount to absorb, by comparison to the other costs of sale for the average retailer. Why charge cardholders 2.5% for something that costs less than 1%?
Because they are recovering the cost of everything surrounding that payment - network fees, terminal rental, bank margin (usually a fraction of a %).

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Goosey

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#3398067 29-Jul-2025 16:00

A lot don’t seem to understand the fees still get charged to the retailers by their merchants.

ok, the interchange fee between banks will drop, but that’s not going to materially change the transaction fees banks/merchants have signed retailers up to.

many retailers either pay per transaction or pay a set monthly fee.
I know many chose to pay per transaction, set a payWave fee that’s appropriate (at least 0.5 -1%) and be done with it / cost neutral. Others charge slightly higher and those that do are usually paying higher fees to their merchants for whatever reason (usually because they might be also getting other offers from the bank business package which offsets in a round about way some of the transaction fees).

ultimately retailers such as dairies will take price increase to non commodity items (non bread, milk, smokes, energy drinks) and put price up 5-10cents on other things like lolly pops and chocolate bars.

gzt

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#3398069 29-Jul-2025 16:12

Exactly. I really don't want to be subsidising reward points with my cash eftpos payments.

gzt

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#3398070 29-Jul-2025 16:12

/ for the record I do have credit cards and also throw shade on reward schemes, nearly all of which annoy me for multiple reasons don't get me started.. ; ).

Handsomedan

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#3398071 29-Jul-2025 16:19

Goosey:

A lot don’t seem to understand the fees still get charged to the retailers by their merchants.

ok, the interchange fee between banks will drop, but that’s not going to materially change the transaction fees banks/merchants have signed retailers up to.

many retailers either pay per transaction or pay a set monthly fee.
I know many chose to pay per transaction, set a payWave fee that’s appropriate (at least 0.5 -1%) and be done with it / cost neutral. Others charge slightly higher and those that do are usually paying higher fees to their merchants for whatever reason (usually because they might be also getting other offers from the bank business package which offsets in a round about way some of the transaction fees).

ultimately retailers such as dairies will take price increase to non commodity items (non bread, milk, smokes, energy drinks) and put price up 5-10cents on other things like lolly pops and chocolate bars.

There is no reason any retailer should be paying a flat Merchant Service Fee. They are wildly overpaying for most of their transactions in that scenario and the knock-on effect is more misinformation about what it costs to accept card payments.

Banks all offer 'Interchange Plus' pricing - every single one of them. That way the retailer knows exactly what theit actual costs are for their transactions - it'll all be there on their monthly statement or if they have access to a portal they can check more often than that.

If I was a retailer I would not be signing up to a flat fee agreement - it's a great way to overpay.

Let's say a small retailer (Dairy for example) pays Interchange plus 1% as their MSF.
For a debit card transaction on the Visa Network, that'll be 1.20% for the whole transaction. Average dairy transaction is what - $10.00?
So they pay 12c for that transaction.

Where are these tens of thousands of dollars that small businesses are paying in MSF?
If they're priced correctly based on their average ticket price, volume of transactions and total value of transactions as well as the general card risk profile, they'll be paying a fair price for their transactions and they'll get the business that they want - people buying stuff, paying with the most convenient tool they have (EFTPOS card, Phone, Watch, whatever) and there'll be no complaints, no dissatisfaction and no claims of unfair behaviour.

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TwoSeven

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#3398073 29-Jul-2025 16:32

Personally, I just want it easier to make payments and I don't want to see surcharges and costs listed all over the place. I don't really care about the excuses for why that isn't possible.

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