Credit Card Surcharge

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Forums › Finance and wealth management › Credit Card Surcharge

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Kyanar

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#290651 17-Jan-2010 08:01

I thought that was the gubermint cheque duty allstarnz? I've noticed that instead, the first cheque used now carries about a $4 surcharge (charged directly to your bank) and that pays the charge for the whole book.

sbiddle - do I know why the Commerce Commission took the action they did? Well, ostensibly any action the Commerce Commission takes is meant to be in the interests of helping consumers. In this instance, it was because they believed that Visa and Mastercard were involved in price fixing. Well, we all know they were. I should probably point out that there is price fixing in other industries too. Petrol for one. Electricity for another. I don't see the comcom looking into those.

But anyway, my point is that this action by the commerce commission has directly harmed consumers. With advocates like that, who needs enemies? They should have clamped down the instant any merchant charged a credit card surcharge without lowering their prices for non-credit customers. Why? Because that merchant is not passing along costs because the costs are factored into their non-credit purchase prices already. The credit card surcharge is pure profit to them.

sbiddle

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#290655 17-Jan-2010 08:26

Kyanar:
sbiddle - do I know why the Commerce Commission took the action they did? Well, ostensibly any action the Commerce Commission takes is meant to be in the interests of helping consumers. In this instance, it was because they believed that Visa and Mastercard were involved in price fixing. Well, we all know they were. I should probably point out that there is price fixing in other industries too. Petrol for one. Electricity for another. I don't see the comcom looking into those.

Where does price fixing exist in petrol sales? We all might like to think there is but other than a handful of cases where free cash wash deals have ended nobody has ever been able to provide proof. Price fixing is *not* when two companies charge the same price, it's when they are entering into an agreement to provide products at the same price.

If your sole evidence for price fixing is because all sites charge the same price then it has no basis, not all sites do charge the same. Here in the Hutt Valley for example the vast majority of Shell, Caltex and Mobil sites all run 91 and 95 at a 2c discount over BP. Yesterday I spotted 3 different price points for petrol driving past a BP, Mobil, Shell and a Caltex. 2 years ago everybody charged the same for petrol, I don't know what things are like where you live but it's certainly not the norm in many larger cities now where discounting does occur.

The downside with discounting though is people don't necessarily change their buying habits - they can bleat all they want about petrol prices but will happily keep buying fuel from their regular site even if it's more expensive.

stuzzo

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#290656 17-Jan-2010 08:34

I think it's a bit early to tell how it's going to work out for the consumer and it may be impossible to judge anyway because it will be hard to tell if retailers are passing on their savings to the price of goods and services over the course of time. One would assume that market forces dictate that they do.

It will be some inconvenience to have to check each time you make a purchase by credit card that there's not a surcharge and I suspect retailers won't always make it clear at the sale until the price comes up on the till.

sbiddle

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#290667 17-Jan-2010 09:50

stuzzo: I think it's a bit early to tell how it's going to work out for the consumer and it may be impossible to judge anyway because it will be hard to tell if retailers are passing on their savings to the price of goods and services over the course of time. One would assume that market forces dictate that they do.

It will be some inconvenience to have to check each time you make a purchase by credit card that there's not a surcharge and I suspect retailers won't always make it clear at the sale until the price comes up on the till.

Retailers have to make it very clear that they impose credit card charges. This is one of the conditions of charging a surcharge.

sleepy

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#290674 17-Jan-2010 10:58

The cheque fee charged was and is a bank fee that was charged per cheque paid to the bank in rather than Telecheck which was higher but havent done one in a long time so cant remeber what the fees were.

I was recently charged a chq fee for my kids school photograph and it still annoys me but nearly everyone accepted it so maybe they will with the cc surcharge. I know it confused me when i moved from the uk why was i bieng charged for paying for something i bought.

As a retailer i have no plans to implement any surcharge to my customers for paying by cc.
We rely heavily on people bieng able to pay by cc as there purchases are often over there daily eftpos limit. It certainly makes our life easier, there may be fees attached but it saves a lot of time.

Kyanar

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#290686 17-Jan-2010 12:57

c71931f: Does the retailer get charged any surcharge if you use a visa debit card as a online payment?

Yes. It's processed via Visanet so it incurs the same fee as a credit card.

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stuzzo

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#290690 17-Jan-2010 13:16

sbiddle:
stuzzo: I think it's a bit early to tell how it's going to work out for the consumer and it may be impossible to judge anyway because it will be hard to tell if retailers are passing on their savings to the price of goods and services over the course of time. One would assume that market forces dictate that they do.

It will be some inconvenience to have to check each time you make a purchase by credit card that there's not a surcharge and I suspect retailers won't always make it clear at the sale until the price comes up on the till.

Retailers have to make it very clear that they impose credit card charges. This is one of the conditions of charging a surcharge.

Yes, but if the surcharge becomes widespread I can see these rules becoming a little hazy.

old3eyes

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#290703 17-Jan-2010 14:11

Just watch the CC surcharge creep from 2.5% to 5% in a very short time just like the restaurant and cafes surcharge has crept up from 7.5% to as high as 20% which I saw on one place over the holidays..

Regards,

Old3eyes

robbyp

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#290720 17-Jan-2010 16:19

old3eyes: Just watch the CC surcharge creep from 2.5% to 5% in a very short time just like the restaurant and cafes surcharge has crept up from 7.5% to as high as 20% which I saw on one place over the holidays..

Some payment processors, like DPS for example(who also have eftpos terminals), charge the merchant 50c per transaction, plus then the bank charges a CC percentage. Therefore if the transaction is a small amount, such as $5, the retailer is actually having to pay over 8% on that transaction in fees.

When I was in the books and more/kiwibank store some time ago, they wouldn't accept my credit card, unless I purchased at least $20 worth of stuff.

This is a good article, and discusses how cash buyers have been subsidising credit card buyers http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10620641

drajk

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#290728 17-Jan-2010 17:12

robbyp:
old3eyes: Just watch the CC surcharge creep from 2.5% to 5% in a very short time just like the restaurant and cafes surcharge has crept up from 7.5% to as high as 20% which I saw on one place over the holidays..

Some payment processors, like DPS for example(who also have eftpos terminals), charge the merchant 50c per transaction, plus then the bank charges a CC percentage. Therefore if the transaction is a small amount, such as $5, the retailer is actually having to pay over 8% on that transaction in fees.

Don't they also charge such a fee for EFTPOS transactions as well? - so are you advocating that merchants should charge people extra when they use their ATM card at an EFTPOS terminal to pay say $5 for a pie and a drink as the $0.50 will cost the merchant 10% of the transaction cost?

robbyp, you seem to have missed the points that I and many others have made that there are many costs and risks associated with cash as well; security, cash pickups, cash transaction fees at the bank, employee theft, time for banking to be done etc... etc...

In essence in many situations the CC fees are cheap for many merchants as they remove many of the problems/risks and thus associated costs which are involved with cash handling. Of course some dishonest business people in small businesses may prefer cash as they may not 'process it through till' so to speak but these people annoy me greatly as they do not pay their fair share when it comes to tax and thus make the rest of us have to pay more.

I note in one of your earlier posts that you stated that you weren't completely aware of cash handling fees - you should have a look at some of the bank websites
e.g. ASB https://www.asb.co.nz/Business/About-Us/Interest-rates-and-fees/Service-charges

Cash handling

Cash transactions are free for up to $1,000 of notes and for up to $100 of coin, per day, per unique number, and then:

Count while you wait
Coin - $3.00 per $100 or part thereof, per banking. Notes - $3.00 per $1,000 or part thereof, per banking.

ASB FastDeposit / FastCount
Coin - $1.00 per $100 or part thereof, per banking. Notes - $2.00 per $1,000 or part thereof, per banking.

Fees for notes are rounded up to the nearest $1,000 and for coins up to the nearest $100 per banking.

Westpac http://www.westpac.co.nz/olcontent/olcontent.nsf/Content/Other+service+fees

Cash handling will be charged when the amount of cash deposited to an account in any charge month* is $25,000 or more at the following rates (the fee applies to the full amount deposited.)

teller counter
0.35% of the cash amount

deposit box
0.25% of the cash amount

*A charge month starts on the last business day of the calendar month and finishes on the second to last business day of the following month.

BNZ http://www.bnz.co.nz/Rates_and_Fees/1,1184,20-193.html

Cash handling (non personal accounts only)
Cash handling fees are calculated per account suffix for all cash transactions totalling $2,000 or more per day

Cash transactions less than $2,000 per day
No charge

Teller assisted cash deposits
$0.50 per $100

Deposits using Express Deposit Tower, business deposit unit, ATM, Express Link
$0.25 per $100

So as you can see there may be significant cash handling fees and on top of these there are also the security risk/costs, the transaction fees, and the time taken to do banking.

As I pointed out in one of my earlier posts you will always get some customers which cost you more than others - in one way or another - perhaps they take longer to deal with or whatever - ANYWAY if you are running a business I believe the only way you should approach these sort of issues is to look at what your average costs are per transaction and build that into your prices - if you want to be completely ruthless and scientific about making a certain definite profit percentage on each transaction you will likely never make any significant money as you will spend much of your time analysing the various costs involved - unless of course you choose to not put any value on things such as your time dealing with the customer etc... and if you want to only consider some variables then the costing is not really that scientifically accurate!

robbyp

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#290739 17-Jan-2010 19:39

drajk:
robbyp:
old3eyes: Just watch the CC surcharge creep from 2.5% to 5% in a very short time just like the restaurant and cafes surcharge has crept up from 7.5% to as high as 20% which I saw on one place over the holidays..

Some payment processors, like DPS for example(who also have eftpos terminals), charge the merchant 50c per transaction, plus then the bank charges a CC percentage. Therefore if the transaction is a small amount, such as $5, the retailer is actually having to pay over 8% on that transaction in fees.

Don't they also charge such a fee for EFTPOS transactions as well? - so are you advocating that merchants should charge people extra when they use their ATM card at an EFTPOS terminal to pay say $5 for a pie and a drink as the $0.50 will cost the merchant 10% of the transaction cost?

robbyp, you seem to have missed the points that I and many others have made that there are many costs and risks associated with cash as well; security, cash pickups, cash transaction fees at the bank, employee theft, time for banking to be done etc... etc...

In essence in many situations the CC fees are cheap for many merchants as they remove many of the problems/risks and thus associated costs which are involved with cash handling. Of course some dishonest business people in small businesses may prefer cash as they may not 'process it through till' so to speak but these people annoy me greatly as they do not pay their fair share when it comes to tax and thus make the rest of us have to pay more.

I note in one of your earlier posts that you stated that you weren't completely aware of cash handling fees - you should have a look at some of the bank websites
e.g. ASB https://www.asb.co.nz/Business/About-Us/Interest-rates-and-fees/Service-charges

Cash handling

Cash transactions are free for up to $1,000 of notes and for up to $100 of coin, per day, per unique number, and then:

Count while you wait
Coin - $3.00 per $100 or part thereof, per banking. Notes - $3.00 per $1,000 or part thereof, per banking.

ASB FastDeposit / FastCount
Coin - $1.00 per $100 or part thereof, per banking. Notes - $2.00 per $1,000 or part thereof, per banking.

Fees for notes are rounded up to the nearest $1,000 and for coins up to the nearest $100 per banking.

Westpac http://www.westpac.co.nz/olcontent/olcontent.nsf/Content/Other+service+fees

Cash handling will be charged when the amount of cash deposited to an account in any charge month* is $25,000 or more at the following rates (the fee applies to the full amount deposited.)

teller counter
0.35% of the cash amount

deposit box
0.25% of the cash amount

*A charge month starts on the last business day of the calendar month and finishes on the second to last business day of the following month.

BNZ http://www.bnz.co.nz/Rates_and_Fees/1,1184,20-193.html

Cash handling (non personal accounts only)
Cash handling fees are calculated per account suffix for all cash transactions totalling $2,000 or more per day

Cash transactions less than $2,000 per day
No charge

Teller assisted cash deposits
$0.50 per $100

Deposits using Express Deposit Tower, business deposit unit, ATM, Express Link
$0.25 per $100

So as you can see there may be significant cash handling fees and on top of these there are also the security risk/costs, the transaction fees, and the time taken to do banking.

As I pointed out in one of my earlier posts you will always get some customers which cost you more than others - in one way or another - perhaps they take longer to deal with or whatever - ANYWAY if you are running a business I believe the only way you should approach these sort of issues is to look at what your average costs are per transaction and build that into your prices - if you want to be completely ruthless and scientific about making a certain definite profit percentage on each transaction you will likely never make any significant money as you will spend much of your time analysing the various costs involved - unless of course you choose to not put any value on things such as your time dealing with the customer etc... and if you want to only consider some variables then the costing is not really that scientifically accurate!

It is totally dependent on the business, your margins, and your turnover. eg Independant petrol companies have very small margins, so need to charge the fee on petrol if that is all they are purchasing.

If you are fortunate to be bringing in more than $1000 in cash per day, then a cash depost feet would probably be the least of your worries. However many small businesses in NZ wouldn't be bringing in that sort of money in cash, and many small business in NZ do struggle so try to save where they can. I wouldn't imagine a small pizza place would be bringing in more than $1000 per day, most purchases would be by eftpos. Many people prefer to pay by cheque or eftpos than cash, and eftpos is just a per transaction amount of say 50cents, not a percentage.

Try telling the police and the ACC that they shouldn't be charging a convenience fee.

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Kyanar

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#290740 17-Jan-2010 19:52

Actually, convenience fees are allowed - even under the pre-lawsuit merchant agreement. Noone except the government used them though, because if they did then their competition would just not charge it. Of course now that the nice morons at the commerce commission have clamped down on Visa and Mastercard and brought interchange fees into the public eye, merchants can all start charging them (and mark my words, they fracking will) and have the handy excuse of "blame Visa/Mastercard/Amex/my dog" when consumers (you know, who the commission is meant to serve?) complain of the gouging they're now receiving.

freitasm

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#3394739 17-Jul-2025 08:21

Posted today's Commerce Commission press release here.

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