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1831 posts

Uber Geek


  # 2205502 27-Mar-2019 09:34
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Thanks, very informative thread.

572 posts

Ultimate Geek


  # 2205510 27-Mar-2019 10:10
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coffeebaron:

 

A long overdue upgrade of the EFTPOS system is needed to allow Contactless EFTPOS payments.

 

 


That will never happen. The card schemes developed and own the technology. Contactless transactions use the credit card 'rails' and thus incur fees.

 

 

 

Disclaimer: I work in merchant banking and deal with this stuff on a daily basis. 

 

Last year Visa and Mastercard introduced contactless interchange fees for scheme debit cards. Visa is 0.30% on debit contactless and Mastercard is 0.40%. Mastercard also has a micro payment fee of $0.004 for contactless debit transactions less than $15.

 

It's the debit card contactless fees that cause merchants so much grief. Transactions previously costing nothing (scheme debit inserted or swiped and CHQ or SAV selected) now incur fees because when you enable PayWave there's a debit to contactless flip that happens as most customers, when given the choice, will tap the card for convenience. In most cases sales have not increased. I've seen massive reductions in debit transactions when PayWave is enabled, and costs shoot up, like that customer in the Herald story. 

 

Where banks go wrong is when a merchant on say 2% service fees decides to enable PayWave and their pricing structure is not updated. At that point, they ideally should be moved to Interchange Plus pricing, a cost plus margin model. Say the bank margin is 0.30%, a contactless Visa debit now costs 0.30% interchange, plus 0.30% bank margin for a total cost of 0.60%, a big reduction on their previous fee of 2% for the same transaction.

 

There's a science behind setting the margin and the above is just an example. It comes down to turnover, card mix, ticket size etc.....but this model ensures the merchant pays significantly less than if they stayed on their fixed rate, using the above example. 

 

I met a customer yesterday (bar) who can't live without it. When they are busy it's a godsend. Likewise I met another customer (pharmacy) and I advised against enabling contactless as their transaction volume is so low there won't be any benefit to their customers. 

 

It's horses for courses and many businesses have no need for it. 

 

Ultimately the card schemes account for most of the costs in credit and contactless transactions but banks can do a better job by reviewing customers more regularly and never turning on PayWave without a rate review first. 

 

 

 

 

 

 


 
 
 
 


572 posts

Ultimate Geek


  # 2205515 27-Mar-2019 10:21
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surfisup1000:

 

Banks are disgusting....they take a 2% cut from merchants who work hard and risk so much. Banks assume no risk. 

 

Billions moves through our credit card systems and banks take the attitude of taking just a bit off everyone is OK. But, the cumulative 'bit' is an absolutely ludicrous amount of money that is disproportionate to the investment in systems.  

 

 

Cards are much for efficient than cash for businesses. Ask most merchants if they can live without electronic payments and they would say no. The card schemes and banks provide a service by facilitating those payments. That service incurs fees as it costs a lot of money and people to keep the systems running. Eftpos is 'free' to the merchant but the banks have to pay Paymark millions for switching those 'free' transactions. Australia charges merchants for Eftpos, something often overlooked when comparing fees between NZ and Aus. 

 

The merchant pays many costs to run their business and merchant fees are just one of them. As I said in my earlier post, banks can manage this better by ensuring customers are on the right fee structure. 

 

 


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  # 2205540 27-Mar-2019 11:05
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One of the issues with having contactless EFTPOS is fraud.

 

Fraud is a reality of banking and credit card usage. While contactless doesn't result in increases in credit card fraud vs chip+PIN credit cards, (as some people would like you to believe), it is still a higher level than a chip+pin EFTPOS transaction which has very minimal fraud levels. Fraud that does occur is typically due to negligence when somebody has given their card and PIN to somebody else.

 

Credit cards have interchange fees which can (in part) cover fraud costs for the bank. If contactless EFTPOS was to be launched as a product there would need to be discussion around how fraud would be dealt with because the simple reality is it will mean increased fraud levels over existing chip+PIN EFTPOS.

 

 

 

 

 

 


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  # 2205542 27-Mar-2019 11:13
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mattwnz:

robfish:


I saw the TVNZ news item comparing charges in different countries. It made me angry.



 


 


It also applies to the price of building hardware. I checked the price of one piece of a gutter fitting in NZ, and compared it to the price of the same fitting in OZ in the same big box retailer, and it was almost double in NZ. $59 AUD in Oz , compared to $112 NZD in NZ, for exactly the same fitting. No wonder building in NZ is so expensive compared to Oz, we need some decent competition. A pity they don't seem to run stories on prices differences these days. Campbell live used to do it all the time with food prices.


 


 



What we need is to accept that other places can have equally valid building standards.

California, for example, had amongst the most stringent codes in the world. It also has earthquakes etc.

Accepting that anything approved to California code can be used in New Zealand would immediately make a huge range of much cheaper priced materials available.





4403 posts

Uber Geek


  # 2205548 27-Mar-2019 11:32
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sbiddle:

 

Paywave fees are identical to normal credit card fees  

 

 

It is not just the media, merchants tell us that paywave costs more. 

 

But, i'll accept what you say. 

 

However, I choose payment method first.  I won't use my transactional account just because paywave is unavailable. 


572 posts

Ultimate Geek


  # 2205554 27-Mar-2019 11:38
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surfisup1000:

 

sbiddle:

 

Paywave fees are identical to normal credit card fees  

 

 

It is not just the media, merchants tell us that paywave costs more. 

 

But, i'll accept what you say. 

 

However, I choose payment method first.  I won't use my transactional account just because paywave is unavailable. 

 

 

 

 

PayWave does cost more. When previously the transaction was 'free' (debit card using CHQ/SAV), any cost will be 'more'.


 
 
 
 


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Ultimate Geek

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  # 2205691 27-Mar-2019 14:34
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My objection to paywave is 2 bits - I have a debit card so yes making it a credit card transaction is not on. The bigger issue for me is the $80 per transaction amount. This is just too high. Maybe the Auckland latte set sees it as small change but ask any senior or mum with kids and that can be the entire spare amount for the week when bills are paid. You are just too open to fraud transactions. Maybe that's a perception but its one that's hard to dismiss. 


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  # 2205695 27-Mar-2019 14:52
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Quinny:

 

My objection to paywave is 2 bits - I have a debit card so yes making it a credit card transaction is not on. The bigger issue for me is the $80 per transaction amount. This is just too high. Maybe the Auckland latte set sees it as small change but ask any senior or mum with kids and that can be the entire spare amount for the week when bills are paid. You are just too open to fraud transactions. Maybe that's a perception but its one that's hard to dismiss. 

 

 

While the cardholder has zero liability when people use their card fraudulently, they will have to spend the time to dispute it, which would inconvenience the people in your example.  

 

https://www.visa.co.nz/pay-with-visa/security/zero-liability.html

 

Some, if not all, banks apps permit contactless to be disabled on your cards. AFAIK, all contactless transactions in NZ are all online and require your bank's approval. This reduces cardholder risk. 





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624 posts

Ultimate Geek


  # 2205728 27-Mar-2019 15:23
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There's also a perception that a signature, is much more secure than a 4 digit pin that locks after 3 incorrect attempts.


355 posts

Ultimate Geek


  # 2205845 27-Mar-2019 19:21
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MileHighKiwi:

 

surfisup1000:

 

sbiddle:

 

Paywave fees are identical to normal credit card fees  

 

 

It is not just the media, merchants tell us that paywave costs more. 

 

But, i'll accept what you say. 

 

However, I choose payment method first.  I won't use my transactional account just because paywave is unavailable. 

 

 

 

 

PayWave does cost more. When previously the transaction was 'free' (debit card using CHQ/SAV), any cost will be 'more'.

 

 

Nothing is ever free from a bank. Both the customer and retailer pay substantial fees already to the bank to enable them to make substantive profits. This contactless fee is an example of a ripoff from banks. No reason in the world why NZ retailers pay so much more than overseas retailers. Pure greed.

 

Its like the Aussie banks initially refusing Apple pay because they expected Apple to hand over the code so they could engineer their own Apple pay service. Pathetic.


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  # 2205864 27-Mar-2019 19:55
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Bluntj:

 

Nothing is ever free from a bank. Both the customer and retailer pay substantial fees already to the bank to enable them to make substantive profits. This contactless fee is an example of a ripoff from banks. No reason in the world why NZ retailers pay so much more than overseas retailers. Pure greed.

 

Its like the Aussie banks initially refusing Apple pay because they expected Apple to hand over the code so they could engineer their own Apple pay service. Pathetic.

 

 

Both of your statements are stretching the truth a lot.

 

The banks don't control interchange fees - they are set by the credit card companies. Interchange fees in NZ are also interesting in the fact the Commerce Commission took both Visa and Mastercard to court and won a court case over credit card surcharges and interchange fees. Their win has backfired badly, and the result is the Commerce Commission are directly responsible for the launch of new higher fee Platinum cards and higher interchange rates. You could also argue the Commerce Commission have cost NZers hundreds of millions of dollars over the past 10 years due to their court action.

 

I'm also struggling to know what is "pathetic" about the Australian banks wanting Apple to open up NFC in their devices so it could be used by 3rd party developers in the exact same way Android's NFC stack is directly accessible to developers so they can build NFC based applications.

 

To me the only evil company here is Apple who blatantly refuse to do this resulting in banks (and ultimately end users) having to pay a premium for a closed system that is Apple Pay and has incredibly high fees associated with it.

 

 


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  # 2205881 27-Mar-2019 20:35
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Apples security benifit for apple pay over other contactless is really only relevent in backwards USA where they still sign for things and noone ever checks them at all.

 

They were wanting a cut from banks for offering nothing ontop of any other contactless system.





Richard rich.ms

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  # 2206051 28-Mar-2019 07:31
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richms:

 

Apples security benifit for apple pay over other contactless is really only relevent in backwards USA where they still sign for things and noone ever checks them at all.

 

They were wanting a cut from banks for offering nothing ontop of any other contactless system.

 

 

And you've also historically never even needed to sign for mag stripe transactions at many retailers in the US for low value (US$50 from memory) transactions.

 

The US actually dumped signing for transactions in April 2018.

 

 


572 posts

Ultimate Geek


  # 2206095 28-Mar-2019 09:16
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Bluntj:

 

MileHighKiwi:

 

 

 

surfisup1000:

 

 

 

sbiddle:

 

 

 

Paywave fees are identical to normal credit card fees  

 

 

 

 

 

 

It is not just the media, merchants tell us that paywave costs more. 

 

 

 

But, i'll accept what you say. 

 

 

 

However, I choose payment method first.  I won't use my transactional account just because paywave is unavailable. 

 

 

 

 

 

 

 

 

 

 

PayWave does cost more. When previously the transaction was 'free' (debit card using CHQ/SAV), any cost will be 'more'.

 

 

 

 

 

 

Nothing is ever free from a bank. Both the customer and retailer pay substantial fees already to the bank to enable them to make substantive profits. This contactless fee is an example of a ripoff from banks. No reason in the world why NZ retailers pay so much more than overseas retailers. Pure greed.

 

 

 

Its like the Aussie banks initially refusing Apple pay because they expected Apple to hand over the code so they could engineer their own Apple pay service. Pathetic.

 




EFTPOS is completely free from banks in NZ, but not in Aussie.

Eftpos includes proprietary debit cards; I.e standard mag stripe bank card without a chip.

Eftpos also includes scheme debit; I.e. Visa and Mastercard branded debit cards with a chip, and when those cards are inserted or swiped and CHQ or SAV is selected they go via the donestic eftpos network, again this is free.

When that debit card is tapped it goes via the card schemes and interchange fees applies.


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