Credit Card Surcharge

Please note this sub-forum does not provide professional finance advice. You should seek advice from a licensed financial advisor.

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification.

If investing please consider our affiliate link for new accounts: Sharesies.

Forums › Finance and wealth management › Credit Card Surcharge

JimmyLizar

321 posts

Ultimate Geek

#56535 15-Jan-2010 16:17

Background on topic here

It mentions in the article that the surcharge can only be to cover costs and not to increase revenue.

Our local pizza shop, which enjoys a monopoly (as there is only one pizza shop in town) has recently introduced a 5% surcharge.

I believe that this is too much.

I could vote with my feet but that would mean no pizza, and that IS NOT an option, so I pay via eftpos.

Anyone know what is considered a reasonable surcharge?

.....c'mon sucker lick my battery........
binary solo...0000110000110000111...

1 | 2 | 3

19282 posts

Uber Geek
Inactive user

#290360 15-Jan-2010 16:24

You believe this is to much but you need to know what the credit card company charges them

NordVPN

Protect your online activity with NordVPN (affiliate link).

patatrat

261 posts

Ultimate Geek

#290363 15-Jan-2010 16:32

Vote with your cash. Pay the bill in ten cent coins.

PenultimateHop

637 posts

Ultimate Geek

Trusted

#290365 15-Jan-2010 16:43

JimmyLizar: Background on topic here

It mentions in the article that the surcharge can only be to cover costs and not to increase revenue.

Our local pizza shop, which enjoys a monopoly (as there is only one pizza shop in town) has recently introduced a 5% surcharge.

I believe that this is too much.

I could vote with my feet but that would mean no pizza, and that IS NOT an option, so I pay via eftpos.

Anyone know what is considered a reasonable surcharge?

5% is high. When I was a CC merchant I paid 1.65% on Visa/MC and 2.9% on Amex.

I took to paying CC-surcharge merchants in cash (and getting a receipt!), since the cash handling costs are MUCH higher than a typical credit card transaction.

The surcharge nonsense that appears to be coming to NZ is dumb.

wellygary

7375 posts

Uber Geek

#290366 15-Jan-2010 16:44

patatrat: Vote with your cash. Pay the bill in ten cent coins.

Only if your Pizza costs less that $5.

10c coins are only legal tender up to this amount.

I would ask you credit card company ( bank) what they would call reasonable, ( they will know what the merchant is paying)- the CC companies are by all accounts not overly happy if merchants start to discourage usage with high fees...

http://www.legislation.govt.nz/act/public/1989/0157/latest/DLM200015.html#DLM200015

Legal tender

(1) Every bank note issued, or deemed to be issued, under this Act shall be a legal tender for the amount expressed in the note.
(2) A tender of payment of money, to the extent that it is made in coins issued, or deemed to be issued, under this Act, shall be a legal tender,

(a) in the case of coins of a denomination of $10 or more, for the payment of any amount

(b) in the case of coins of a denomination of $1 or more but less than $10, for the payment of any amount not exceeding $100:

(c) in the case of coins of the denomination of 5 cents or more, but less than $1, for the payment of an amount not exceeding $5:

(d) in the case of any coins of the denomination of less than 5 cents, for the payment of an amount not exceeding 20 cents.

3) The references to coins and bank notes in subsections (1) and (2) do not include references to coins and bank notes that have been called in.

JimmyLizar

321 posts

Ultimate Geek

#290368 15-Jan-2010 16:51

johnr: You believe this is to much but you need to know what the credit card company charges them

You are right, I dont know that it is too high until I know what the upper limit for merchant surcharges are.

This is the info I was fishing for.

wellygary: Only if your Pizza costs less that $5.

10c coins are only legal tender up to this amount.

I (and I wager) that most other people are completely unaware of this fact

.....c'mon sucker lick my battery........
binary solo...0000110000110000111...

billgates

4623 posts

Uber Geek

Trusted

#290370 15-Jan-2010 16:56

Max they would be paying is 2.5% in CC fees to visa/master card and 3% to Amex.

Do whatever you want to do man.

robbyp

1199 posts

Uber Geek

#290375 15-Jan-2010 17:14

billgates: Max they would be paying is 2.5% in CC fees to visa/master card and 3% to Amex.

Where do you get that information from. From what I have heard there is a scale depending on how much money goes through by CC per month. I get charged about 4.25% by the online CC provider I use.

johnr

19282 posts

Uber Geek
Inactive user

#290376 15-Jan-2010 17:23

JimmyLizar:
johnr: You believe this is to much but you need to know what the credit card company charges them

You are right, I dont know that it is too high until I know what the upper limit for merchant surcharges are.

This is the info I was fishing for.

wellygary:? Only if your Pizza costs less that $5.

10c coins are only legal tender up to this amount.

I (and I wager) that most other people are completely unaware of this fact

Sounds like to me they are trying to make a profit after reading some of these posts

Name and shame

Ragnor

8085 posts

Uber Geek

Trusted

#290377 15-Jan-2010 17:26

There is no free lunch... the retailer/store always pays a fee to Visa/Amex/etc when a credit card is used.

Previously many stores stated a their price then offered a 2-5% discount for paying by cash/eftpos/direct credit.

Now they are doing it the other way around, state the base price and add a surcharge for people using credit cards.

If you think about it anyone not offering a discount for cash/eftpos/direct credit previously was actually using people who pay via cash/eftpos/direct credit to partially subsidise the price of people paying by credit card.

You can thank the commerce commission for the change, it's a direct result of their clampdown last year which stopped a credit card company ban on retailers charging such extra fees for credit card use.

The credit card companies hate the practice of adding a surcharge roughly equal to the cost the store has to pay them as discourages credit card use.

robbyp

1199 posts

Uber Geek

#290383 15-Jan-2010 17:40

johnr:
JimmyLizar:
johnr: You believe this is to much but you need to know what the credit card company charges them

You are right, I dont know that it is too high until I know what the upper limit for merchant surcharges are.

This is the info I was fishing for.

wellygary:? Only if your Pizza costs less that $5.

10c coins are only legal tender up to this amount.

I (and I wager) that most other people are completely unaware of this fact

Sounds like to me they are trying to make a profit after reading some of these posts

Name and shame

I think saying that is unfair, and unfair to base you opinion based solely on what a few people have posted. We don't actually know their costs, but credit card companies can charge companies between 2-5%. Therefore they are within that limit.

PenultimateHop

637 posts

Ultimate Geek

Trusted

#290389 15-Jan-2010 18:03

robbyp:Where do you get that information from. From what I have heard there is a scale depending on how much money goes through by CC per month. I get charged about 4.25% by the online CC provider I use.

There are many ways that merchant fees are set - which include the type of business, location, average value of transactions, total value of transactions, risk profile (charge backs) etc. I recall paying 2.5% on Visa/MC when setting up the merchant account, which subsequently got down to 1.65% when we hit $200K/month in transactions. Amex introduction rate was 3.6%, slowly dropping over time.

I'd be surprised if a pizza company was paying more than 3% though.

JimmyLizar

321 posts

Ultimate Geek

#290394 15-Jan-2010 18:41

Well its not a pizza chain just a local (and very good) pizza shop.

I am not going to name and shame as I cant be certain that they are adding a surcharge greater than what they get charged. I have no way of knowing this without directly asking them and I doubt whether they would tell me anyway.

Their 5% surcharge sounds like it may be on the very upper limit but so might their merchant fees be.

Looks like I will just have to accept it or use eftpos

.....c'mon sucker lick my battery........
binary solo...0000110000110000111...

Kyanar

3874 posts

Uber Geek

Trusted

#290396 15-Jan-2010 18:44

robbyp:
billgates: Max they would be paying is 2.5% in CC fees to visa/master card and 3% to Amex.

Where do you get that information from. From what I have heard there is a scale depending on how much money goes through by CC per month. I get charged about 4.25% by the online CC provider I use.

Online merchants pay about 1-2% more as the risk factor is much higher. It would not be unusual to pay 4.25%. Also, if you didn't have to get a merchant account, then you are actually dealing with a company charging you for both merchant account and gateway fees (a standard account from your bank will not usually include a gateway).

robbyp

1199 posts

Uber Geek

#290398 15-Jan-2010 18:55

JimmyLizar: Well its not a pizza chain just a local (and very good) pizza shop.

I am not going to name and shame as I cant be certain that they are adding a surcharge greater than what they get charged. I have no way of knowing this without directly asking them and I doubt whether they would tell me anyway.

Their 5% surcharge sounds like it may be on the very upper limit but so might their merchant fees be.

Looks like I will just have to accept it or use eftpos

I use cash or eftpos anyway. I mainly use credit card for online purhcases, or from comapnies that I have to order a product through, just in case they end up going out of business before they supply it. If I was getting airpoints I may use it more, but someone has to pay for those airpoints. Perhaps the most fair way of doing it, is the CC compony charging their cusomters directly for each transaction, but then many people wouldn't use them The CC's have come out complaining about retailers, becuase this change by the comcom will probably mean that CC's are used less, which means less profits by the CC companies. This change is perhaps a good thing for NZ, as our amount of personal borrowing is way out of control.

JimmyLizar

321 posts

Ultimate Geek

#290402 15-Jan-2010 19:02

We only use our CC's the good way ie. we pay off the whole balance each month.

We get airpoints (and travel insurance) so we use the CC for everything we possibly can.

Looks like the list of companies that we can use it at will get shorter over time

.....c'mon sucker lick my battery........
binary solo...0000110000110000111...

1 | 2 | 3