Paywave fees too high says NZ Commerce Commission

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Forums › Finance and wealth management › Paywave fees too high says NZ Commerce Commission

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Ultimate Geek

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#3264520 26-Jul-2024 09:25

ANglEAUT:

FYI: Your link starts with read:// instead of https://

Sorry, had it in reader mode as it is easy to read without any ads.

Here's the actual link Unified Payments Interface (UPI): Definition and How It Works (investopedia.com)

Rmani

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eracode

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#3264524 26-Jul-2024 09:29

Rmani:

We are just getting into 7-day banking.

What do you mean by that?

Sometimes I just sit and think. Other times I just sit.

richms

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#3264529 26-Jul-2024 09:37

K8Toledo:

I would have said "The Merchant pays".

Interesting that this thread should appear at a time when I've spoken to more than a few SMB owners in the past month about Paywave costs.

Most are paying $50 - $500 per month on Paywave transaction fees.

My question is why/how can banks charge for Paywave anyway? It seems like a convenience fee to me and unfair that the merchants should foot the bill.

Those must be very small time merchants to be that low.

Places I know its often more than someone's salary that they end up paying to the banks for credit card fees. And adding a surcharge and it mostly dries up because all the people that were putting work stuff on their personal card to get rewards stop doing it.

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#3264534 26-Jul-2024 09:45

Rmani:

May not be directly related to this, but payment industry in India is far ahead. Unified Payments Interface (UPI): Definition and How It Works (investopedia.com)

You can find even street vendors have QR code, so easy to pay without additional charges.

Fund transfers happen literally within seconds just with the mobile number connected to the bank account. We are just getting into 7-day banking.

The scale of the UPI system in India is truly amazing, but most of the banks are struggling to manage the infrastructure as their margins on the transactions are incredibly low.

One way the Indian Govt helped drive this is they removed their lowest denominations of currency. Hence if you want a cup of tea from a street vendor or a snack the only option now is to use UPI.

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richms

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#3264585 26-Jul-2024 09:58

Rmani:

May not be directly related to this, but payment industry in India is far ahead. Unified Payments Interface (UPI): Definition and How It Works (investopedia.com)

You can find even street vendors have QR code, so easy to pay without additional charges.

Fund transfers happen literally within seconds just with the mobile number connected to the bank account. We are just getting into 7-day banking.

Tying it to a mobile number is never a solution.

Richard rich.ms

richms

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#3264588 26-Jul-2024 10:01

eracode:

Rmani:

We are just getting into 7-day banking.

What do you mean by that?

Before recently the banks computers took a break over the weekend and if you paid over the weekend it didnt happen until monday.

Richard rich.ms

K8Toledo

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#3264634 26-Jul-2024 11:48

richms:

K8Toledo:

I would have said "The Merchant pays".

Interesting that this thread should appear at a time when I've spoken to more than a few SMB owners in the past month about Paywave costs.

Most are paying $50 - $500 per month on Paywave transaction fees.

My question is why/how can banks charge for Paywave anyway? It seems like a convenience fee to me and unfair that the merchants should foot the bill.

Those must be very small time merchants to be that low.

Places I know its often more than someone's salary that they end up paying to the banks for credit card fees. And adding a surcharge and it mostly dries up because all the people that were putting work stuff on their personal card to get rewards stop doing it.

Yes they are small - all less than 20 employees.

K8Toledo

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#3265176 27-Jul-2024 16:31

RunningMan:

But the merchant passes that cost on to their customer as well. It may not be a direct surcharge, but it will be a cost of doing business, so factored into the pricing of whatever product or service they provide.

OK well I can only speak to my own experience with very small businesses, for example bakery, hairdressers, dairy, fish and chips shops.

These merchants don't factor transaction fees into their business expenses (I did raise this point with several merchants) instead they just pass the Paywave surcharge onto customers, the surcharge must be accepted to complete the transaction, which in itself seems counter intuitive.

beenz

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#3321977 18-Dec-2024 14:30

I see lots of retailers charging 2.5% surcharge and some even 3% which to me is appalling.
Can we name them in this post ?

richms

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#3321980 18-Dec-2024 14:57

beenz: I see lots of retailers charging 2.5% surcharge and some even 3% which to me is appalling.
Can we name them in this post ?

Without knowing their agreement with the bank there is no way that you can determine that it is appalling.

Richard rich.ms

Handsomedan

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#3321983 18-Dec-2024 15:14

Seems the Commerce Commission have released their draft proposals for Card Payments

https://business.scoop.co.nz/2024/12/18/retail-nz-response-to-commerce-commission-draft-surcharges-decision/

https://comcom.govt.nz/regulated-industries/retail-payment-system?target=documents&root=362573

https://comcom.govt.nz/__data/assets/pdf_file/0032/363848/Retail-Payment-System-Interchange-fee-regulation-for-Mastercard-and-Visa-networks-Draft-Decision-and-Reasons-Paper-18-December-2024.pdf

Looks like they are recommending more regulation of interchange.

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Handsomedan

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#3321985 18-Dec-2024 15:16

A bit more from the report:

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beenz

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#3321987 18-Dec-2024 15:24

This is from the commerce commission web site

We would expect any surcharges to be no more than 0.7% for contactless debit card payments or 1.5-2% for credit card payments. Many merchants only have one rate, so we consider any surcharge above 2% is hard to justify.

Full article here.

https://comcom.govt.nz/regulated-industries/retail-payment-system/surcharging

So 3% surcharge is appalling , name and shame ?

Handsomedan

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#3321989 18-Dec-2024 15:32

beenz: This is from the commerce commission web site

We would expect any surcharges to be no more than 0.7% for contactless debit card payments or 1.5-2% for credit card payments. Many merchants only have one rate, so we consider any surcharge above 2% is hard to justify.

Full article here.

https://comcom.govt.nz/regulated-industries/retail-payment-system/surcharging

So 3% surcharge is appalling , name and shame ?

I think surcharging should be banned - I have said this many, many times.

You don't charge your customers for the power you consume, the air that you breathe or the staff that you pay (unless of course you rip your customers off on public holidays), so why pass on another cost of doing business?
The cards payment platform brings business in - if you are not offering card payments, you'll have less business - it's common sense.
Do you pass on your advertising costs in a separate surcharge?

It's a rort and retailers know it. But it's easy to bash banks, so surcharges remain.

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Ragnor

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#3322119 18-Dec-2024 22:43

Handsomedan:

I think surcharging should be banned - I have said this many, many times.

You don't charge your customers for the power you consume, the air that you breathe or the staff that you pay (unless of course you rip your customers off on public holidays), so why pass on another cost of doing business?
The cards payment platform brings business in - if you are not offering card payments, you'll have less business - it's common sense.
Do you pass on your advertising costs in a separate surcharge?

It's a rort and retailers know it. But it's easy to bash banks, so surcharges remain.

The seller's staff, electricity etc cost doesn't change because you choose to catch a bus to the store instead of driving but their cost does change if you choose to use pay with credit card instead of a debit card and contactless/paywave instead of contacted...

If you don't let them pass the higher cost on they will just not support the payment methods that cost more, then you have to regulate to require payment methods be offered which is dumb.

IMO, if there are going to be methods that cost more than they should be allowed to pass on the fee but it should be the exact % they are paying not 4-15x of the % some merchants try adding.

Alternatively why do interchange fee % vay for these payment methods anyway, they are all just digital transactions why is contactless more... seems like nonsense, make all transactions the same % fee and then you could argue it should be baked into the retail price for consumers like GST

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