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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#3301348 25-Oct-2024 10:20

At one time tbe bank account owner would pay for each eftpos that left the account. That is what popularized cash out with purchases as that meant that you would also avoid the ATM fees. They killed all those fees to make people use ATMs and eftpos more ages ago.

Richard rich.ms

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#3301359 25-Oct-2024 10:49

richms:

At one time tbe bank account owner would pay for each eftpos that left the account. That is what popularized cash out with purchases as that meant that you would also avoid the ATM fees. They killed all those fees to make people use ATMs and eftpos more ages ago.

I don't remember ever paying an eftpos fee.

"And of course, Eftpos was free for customers. “The banks were keen to get rid of cheque volume and by making Eftpos free that was a good basis for encouraging people to make payments electronically rather than using cheques.”"

https://thespinoff.co.nz/business/09-06-2018/the-only-way-to-pay-charting-the-history-and-future-demise-of-eftpos

wellygary

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#3301368 25-Oct-2024 11:22

Bung:

richms:

At one time tbe bank account owner would pay for each eftpos that left the account. That is what popularized cash out with purchases as that meant that you would also avoid the ATM fees. They killed all those fees to make people use ATMs and eftpos more ages ago.

I don't remember ever paying an eftpos fee.

"And of course, Eftpos was free for customers. “The banks were keen to get rid of cheque volume and by making Eftpos free that was a good basis for encouraging people to make payments electronically rather than using cheques.”"

https://thespinoff.co.nz/business/09-06-2018/the-only-way-to-pay-charting-the-history-and-future-demise-of-eftpos

Businesses hated cheques too, they took forever for the customer to fill out, clogging up checkouts, and a small proportion would bounce meaning you as a store owner was left out of pocket...

EFTPOS for large transactions was a no-brainer for merchants, and when the costs fell enough small stores also came on board...

richms

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#3301445 25-Oct-2024 12:34

Bung:

I don't remember ever paying an eftpos fee.

"And of course, Eftpos was free for customers. “The banks were keen to get rid of cheque volume and by making Eftpos free that was a good basis for encouraging people to make payments electronically rather than using cheques.”"

https://thespinoff.co.nz/business/09-06-2018/the-only-way-to-pay-charting-the-history-and-future-demise-of-eftpos

20c per transaction all the way to the late 90's on most bank accounts, it was one of the perks of getting a student account along with the overdraft. Then it was the attraction to Bank Direct as they didn't charge that. Others fell in line pretty quickly after that.

Richard rich.ms

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#3301459 25-Oct-2024 13:37

I may have had a bank account that didn't charge. I know that I've been virtually cashless since eftpos. All the histories of eftpos now available claim that it was always free to the customer. Are you referring to some sort of disincentive for withdrawals from a savings account?

mudguard

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#3301465 25-Oct-2024 14:36

richms:

mudguard:

I can see a small retailer (say a coffee van) not accepting cash. I mean they can do all their work remotely except needing to deposit the cash in the bank. Plenty of Facebook posts say oh the cash can go round and round without incurring these fees. However I assume businesses can't just dip into the cash they've taken in to use for other expenses, I'm not sure.

Yes you can use the cash you have taken to pay for business expenses or pay your staff with it. That is the whole point of cash.

Not sure how keen I'd be getting my salary in a little brown envelope each month!

Jvipers2

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#3301479 25-Oct-2024 15:32

Why hasn't more businesses adopt Online EFTPOS?

Online EFTPOS enables you to pay online with your smart phone directly from your bank app. Not only is it the safer and easier way to pay online, it's also one of the most secure payment methods available today as you never need to expose your payment or banking credentials.

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richms

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#3301520 25-Oct-2024 16:52

Jvipers2: Why hasn't more businesses adopt Online EFTPOS?

Online EFTPOS enables you to pay online with your smart phone directly from your bank app. Not only is it the safer and easier way to pay online, it's also one of the most secure payment methods available today as you never need to expose your payment or banking credentials.

When we looked at it there was only one of the processors offering it, it was for a small subset of banks and there were still high fees compared to bank deposit's no fees (not as high as visa/mastercard but still not zero)

Richard rich.ms

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#3304868 3-Nov-2024 12:49

Jvipers2: Why hasn't more businesses adopt Online EFTPOS?

Online EFTPOS enables you to pay online with your smart phone directly from your bank app. Not only is it the safer and easier way to pay online, it's also one of the most secure payment methods available today as you never need to expose your payment or banking credentials.

I just tried this for the first time (PB Tech). It was easy enough, and despite what it says on PB's site I didn't have to get up and find my phone: everything could be done through the desktop browser.

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#3394737 17-Jul-2025 08:18

Today's announcement:

ComCom saves businesses $90 million a year in payment costs

The Commerce Commission has today issued its final decision to reduce interchange fees paid by Kiwi businesses to accept Visa and Mastercard payments.

It costs New Zealand businesses around $1 billion a year to accept Visa and Mastercard payments, which is often passed onto their customers through surcharges and higher product costs.

The Commission has determined this cost is too high and has acted to reduce this cost for businesses by around $90 million a year.

“This is an important step in our continued work to cut costs for businesses and consumers. Our latest decision builds on the initial fee caps set in 2022, which led to $140 million in annual savings to New Zealand businesses,” Commerce Commission Chair Dr John Small says.

“This decision cuts the cost for businesses accepting payments made through credit cards and foreign-issued cards, which are often the most expensive for businesses to accept.

“We expect our latest decision to see the average small business save around $500 each year in lower fees. Individual businesses could save more or less, depending on the mix of transactions they accept.

“In making this decision we were careful to balance lower costs for merchants today with keeping incentives for new fintechs to innovate and challenge the big established incumbents. That meant leaving enough money in the system to keep it competitive and safe from fraud and scams over the long term,” Dr Small says.

Consumers can expect these cost savings to flow through to fewer and lower surcharges, but regulation may still be needed to curb excessive surcharging.

“We’ll be exploring what regulation may be needed to address excessive surcharging, which we consider to be anything more than the cost businesses face to accept Visa and Mastercard payments,” Dr Small says.

The Commission expects payments providers to support businesses to understand their costs to accept these payment types, so where businesses choose to surcharge it accurately reflects their cost.

“We have decided not to regulate the fees for commercial credit card or prepaid debit card payments at this time based on feedback we received during consultation. We’re looking to understand more before deciding if these payment types should be regulated,” Dr Small says.

Background

The Commission prioritised addressing the costs businesses face to accept different payment types to ensure regulation of surcharging didn't have unintended consequences of moving costs for consumers from one area to another.

Without action to lower the fees, limitations on surcharges could see businesses forced to absorb these fees and recoup the money elsewhere, like in higher product costs. Alternatively, it could lead to some businesses not offering certain payment methods, like contactless or credit, as they are too expensive.

When someone uses a Mastercard or Visa credit card or makes a contactless payment, such as Paywave, the business receiving the payment is charged a ‘merchant service fee’. It will most likely seek to recover this fee in the form of surcharges or higher product prices.

This latest decision relates to interchange fees, which make up about 60% of merchant service fees. Mastercard and Visa card issuers (usually banks) receive an interchange fee every time a card holder uses their card at a business to make a payment. The remaining portion of the merchant service fees include fees that are paid to Mastercard and Visa, and to providers of payment services to businesses.

Behodar

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#3394745 17-Jul-2025 08:47

https://comcom.govt.nz/__data/assets/pdf_file/0032/367457/Retail-Payment-System-Interchange-fee-regulation-for-Mastercard-and-Visa-networks-Final-Decision-and-Reasons-Paper-17-July-2025.pdf

Behodar

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#3394746 17-Jul-2025 08:51

The next question is how they're going to enforce these. I see that the current cap for a contactless debit card is 0.2%, yet the other day I was charged $1.50 on a ~$70 transaction, which is around ten times that supposed cap. I didn't know what the cap was until now.

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#3394749 17-Jul-2025 09:26

That's only the interchange fee. They take many bites out of the same pie.

Interchange Fee, Transaction Fee, Acquirer Margin or Fee, Scheme Fee.

There's bound to be more.

openmedia

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#3394776 17-Jul-2025 10:47

Behodar:

The next question is how they're going to enforce these. I see that the current cap for a contactless debit card is 0.2%, yet the other day I was charged $1.50 on a ~$70 transaction, which is around ten times that supposed cap. I didn't know what the cap was until now.

I'm regularly seeing 2.5 and 3% surcharges around Auckland. There needs to be some enforcement on what retailers can charge.

Generally known online as OpenMedia, now working for Red Hat APAC as a Technology Evangelist and Portfolio Architect. Still playing with MythTV and digital media on the side.

richms

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#3394779 17-Jul-2025 11:21

Terminals wont change the surcharge based on card type, so this is not really going to help anyone that much till it can have a lower surcharge for a debit card used with paywave than someone platinum airpoints card.

Richard rich.ms

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