ACCC site explains how businesses can charge a surcharge for paying by card. It doesn't make a distinction between credit cards and debit cards. I know some shops charge a surcharge for payments with credit or debit cards. My understanding is:
1) businesses are charged a surcharge for any credit card payment - so they are allowed to pass the surcharge on to the customer.
2) I believe businesses don't get charged a surcharge for payments with bank debit cards. If this is true, why should businesses charge a surcharge for debit card payments?
Does Surcharge Apply to Both Credit Cards and Bank Debit Cards?
BendBridge on 25/01/2023 - 22:51
Comments
Thanks for the info.
Don't the debit card (Tap and pay transactions, and online ones) are classified just same as credit transaction ? (aka same as credit card)
For people to choose a lower surcharge rate (they usually need to insert card and selecting Savings/Cheque) ?
The tap and pay transactions are normally set up to be processed via the CR option of an EFTPOS transaction. (There are ways to set up tap and pay to process via the eftpos SAV option but that's up to the individual merchant and their agreement with their processor) Even though it's processed via the corresponding network (Mastercard or Visa), a debit card will usually attract a lower merchant fee than credit cards. (Even with credit cards there are different tiers that attract different fees, eg regular and premium cards)
By inserting/swiping you are usually given the options to select between CR/SAV/CHQ. The CR option will be processed via the Visa or Mastercard network, SAV and CHQ will be processed via the eftpos network which usually has a significantly lower fee.
Thanks for the clarification. Now I have a better understanding of the payment machines/systems.
I'll just add some technical terms to this for you. whytea and a little bit of clarification.
(There are ways to set up tap and pay to process via the eftpos SAV option but that's up to the individual merchant and their agreement with their processor)
This is referred to as least cost routing. Some merchants in Australia already do this but some more smaller merchants that do this don't actually see any direct benefit from this been turned on as they're getting billed flat rate processing.
Even though it's processed via the corresponding network (Mastercard or Visa), a debit card will usually attract a lower merchant fee than credit cards. (Even with credit cards there are different tiers that attract different fees, eg regular and premium cards)
While there is still multiple tears for Visa or Mastercard in Australia interchange is heavily regulated so it's not as wide of a difference like it is in other countries like the US However interchange regulation restrictions do not apply to American Express and Diners.
By inserting/swiping you are usually given the options to select between CR/SAV/CHQ. The CR option will be processed via the Visa or Mastercard network, SAV and CHQ will be processed via the eftpos network which usually has a significantly lower fee.
eftpos network is a flat fee per transaction unlike Visa or Mastercard which is a percentage.
None of this really matters unless you're a real big retailer unfortunately as most small to medium-sized businesses are getting charged a flat rate across all card payment methods.
Edit: Trance N Dance, I think I'm in love you're practically the only other person that uses the correct usage of EFTPOS vs eftpos :D
2) I believe businesses don't get charged a surcharge for payments with bank debit cards.
Incorrect. It depends the network which the transaction is processed. This can be eftpos or visa/Mastercard
Ridiculous that Aldi is making us work all this shit out. It should just be included in the price and the people who use EFTPOS/cash should just be subsidising people who use VISA debit/credit. It costs Aldi money to have armoured vans pick up the cash and it costs them staff time when everyone has to wait for the shopper to insert their card and put their PIN in instead of just pay waving like a normal person.
the people who use EFTPOS/cash should just be subsidising people who use VISA debit/credit
the rich get richer?
I don't see what the big deal is. The shoppers who load their trolley onto the conveyer belt the fastest are subsiding the people who load their stuff slower. The people who buy high margin items are subsiding people who buy only low margin items. People who buy only discounted stuff are being subsidised by people who always pay full price. It's not a big deal. What would be a big deal is if Aldi charged elderly people 1% more because they took up so much of the checkout employees time. Or charge people who are disabled more because they move slower and are taking up a parking space for longer, a parking space that Aldi has to pay rent on for the land it occupies. To me it's just as weird that Aldi are complicating the shopping experience by making us work out what kind of card we use and making us use it differently to how we are used to. I think a business the size of Aldi should cop the fee themselves and work out how to average it out. Charge 65.65 cents per can of beans instead of 65 cents or whatever.
@AustriaBargain: Simple - don’t shop ALDI - all your problems solved.
Or use cash, that way you also get benefit of laundering your funds rather than use your local club… 😀😀😀😀
Btw 65.65c would be rounded up to 66c if you only bought 1can and there will then be posts by those who complain they are overcharged unless they buy more at Aldi…
@RockyRaccoon: I buy 24 cans at a time. Do you think I go to Aldi every day to buy one can of beans. I should start buying 48 cans at a time so I can cut my Aldi trips in half.
Ridiculous that Aldi is making us work all this shit out. It should just be included in the price and the people who use EFTPOS/cash should just be subsidising people who use VISA debit/credit. It costs Aldi money to have armoured vans pick up the cash and it costs them staff time when everyone has to wait for the shopper to insert their card and put their PIN in instead of just pay waving like a normal person.
Oh, we're not Aldi. You need to say those things to Aldi, Karen.
Businesses absolutely get charged a fee on debit Visa/Mastercards; the fees are usually lower than credit cards.
What is a card since phones (and watches) can emulate one?
It doesn't make a distinction between credit cards and debit cards
In the world of 'fees' there are only two types of transactions as such in the eyes of these machines, credit cards (CR) or EFTPOS (CHQ/SAV)
If you are using a VISA Debit card for example or any card with a visa/mastercard logo on it, tapping that, means it is charged as a credit card to the retailer regardless how it is 'funded'.
At Aldi if you tap your debit card you get charged the surcharge if you insert the card & enter your pin number, no surcharge.
at aldi, tap an eftpos card, or select eftpos (sav or chq) in apple pay, and there is no surcharge.
I loved this feature of Apple Pay but can’t see this anymore in the Wallet app. Looks like I can’t mark debit cards as EFTPOS anymore.
The selection card menu is no longer present when viewing the card in the wallet app you have to go to the 3 dot menu but it is configurable when you use the card so when you double tap the sleep/wake button the option will be there before you present it to the payment terminal. It defaults to the last option you selected every time.
If you mean your card doesn't have eftpos any more?, You have to manually add the card to your device you can't use any buttons or instant provisioning options from within a banking app so you may have to remove your card and re-add it completely manually.
@Kyle-K: I have looked multiple times and added the card again today. Can’t see the toggle to use card as EFTPOS. Maybe ING has made a deal with Apple to disable it?
@Kyle-K: No that’s not true. I did see it with ING earlier and has enabled the toggle. Was using it at ALDI quite often. I lost it after an iOS upgrade and it’s not back since.
@Kyle-K: Added my UBank card and the option is there to use a EFTPOS. Looks like ING removed the option, must be a deal with VISA and Apple
Unless you bank with Macquarie who don't use EFTPOS so you're forced to press credit and incur the fee
Unless your with HSBC and earn 2% cashback - even after the fee 1.5% profit
Tough call, try to remember my PIN to save 1%. I always see at the checkout people press the wrong button on the machine too. People are too used to payWave. If Aldi didn't have 65 cent beans I would just go to Woolies.
Eftpos on Apple Pay doesn’t require pin. If the terminal has least cost routing, if you tapped, it would be over eftpos
Your above comment: all those people have choices in whether or not they want to subsidise other customers. Paying over VISA isn’t any different to eftpos. You may get more points or whatever, but guess who subsidises that? Guess what benefit businesses have when they accept Amex (similarly Visa/MC over eftpos)? High income earners? If a high income earner comes to your store and finds out you don’t accept Amex, they use another card. All they get is extra fees.
I personally think if they have their eftpos rate above 0%, they have probably money laundering. One store charges 3% for Amex and no fees for others is setting a great example. If they really wanted the points via Amex, they would pay with Afterpay since Afterpay doesn’t allow a surcharge for their customers, and then pay if off with Amex.
So why should you pay extra to route your transaction over visa/Mc instead of eftpos when the only benefit would be points?
eftpos on Apple Pay doesn’t require pin. If the terminal has least cost routing, if you tapped, it would be over eftpos
Actually it does the eftpos network does not support Consumer Device Cardholder Verification Method (CDCVM) so once your payment is over the contactless floor limit you'll be required to enter a PIN.
@Kyle-K: AustriaBargain, I'm also going to enter the chat and join your side of the argument by saying surcharging a stupid in my opinion because most businesses haven't calculated or like to pretend that cash handling doesn't cost money.
While also not admitting that it's starting to cost them even more money to handle that cash and will cost them more in the future as we go more cashless in society which means anyone using cash should be ready in my opinion to be the one paying the surcharge.
If they want to keep their ability to use cash the thing is I don't think most retailers in the next few years will even give them the option to use cash and pay a surcharge.
@askbargain: From a merchant point of you make them pay like everyone else.
However surcharging is a stupid solution to this problem every payment method has a cost to the business, like most businesses have chosen to do unknowingly or knowingly and like they've decided to do with cash they should build it into the cost of doing business like they do with pretty much everything else.
I'm pretty vocal on my opinions regarding surcharging and I'm trying to get people to wake up about the fact that cash is costing the money to handle as well and the costs have been increasing over the last several years too.
The simple fact is most merchant agreements that most small to mid size businesses are using already doing this for them on card payments as they are getting flat rate processing anyway they're working on the laws of averages across all the payment networks at scale to give them that flat rate.
The other big problem that we have in this country is a lot of people think they're entitled to pay with cash, and a lot of businesses think they're required under the law to take cash payments but they're not.
@Kyle-K: I agree that unavoidable surcharging is stupid, but surcharging on visa/mc credit and Amex is perfectly fine.
I do agree that handling cash costs money and takes time, but eftpos is clearly a viable solution.
You may love your credit card points as I do, but it’s not exactly fair to other people who don’t have credit available to them.
Yes, a flat rate is possible from the averages of all payment networks. But if Amex didn’t exist, wouldn’t the average go down?
Again, Amex is great. Offers, points, insurance. But when you’re spending money at a local restaurant, it wouldn’t kill you to use eftpos instead. Unless of course you think there’s a benefit to it that a business should pay 3-5x more to accept Amex.
@Kyle-K: The thing is with cash it's a flat (or very small marginal increase with volume) cost to accept up to a certain point. Most small businesses won't deal in amounts high enough to require security transfers so costs are usually very low and/or fixed. EFTPOS on the other hand has a tangible/identifiable marginal increase in cost directly related to volume. Most businesses treat the cost of accepting cash to be a fixed/flat sunk cost I know the business I'm affiliated with does. With every extra dollar accepted via EFTPOS the cost to handle the transactions goes up not just in merchant fees but in bookkeeping and consolidation. Whereas for every extra dollar accepted in cash just dilutes the costs as an overall percentage compared to a fixed percentage (actually increasing percentage due to increased bookkeeping requirements) for EFTPOS transactions.
The way we see it is cash is the base method for transaction with an accepted (mostly fixed) and sunk cost. If you want to use another method, namely EFTPOS, with an associated cost you'll be slugged a fee as it's not fixed. (Terminal rental is considered a fixed and sunk cost as well, because it is).
Want to know the biggest scam of this?? Bank issued "Platinum Debit" card. This is just your normal debit card with the word "Platinum" on it. As it's as "Platinum" card, the retailer have to pay a higher fees due to it being a "premium" card. Talk about a rip off. There needs to be disruptor to the Visa/Mastercard payment network.
Should all surcharges be shown on a receipt? It's a real pain in the arse when trying to reconcile payments when it doesn't.
Yes they should be
there are places which charge 2% (or more) for Visa and Mastercard. Is it legal, or I can challenge ?
The OP's post has a link to the relevant information, for it to be illegal it would need to be more than they get charged for processing the card payment. It is definitely plausible to say that they could be getting charged up to 2%.
I have recently been pleasantly surprised by the discounts for using cash, often no signs or notices.
1. A $7.90 coffee and cake magically became $7.10 when I handed over cash.
2. A $13.90 chicken curry became $12.50 when I offered the cashier, cash.
In both cases they presumed I would be tapping a card and were handing me the eftpos terminal and had to correct the register to take the cash transaction, this forced the price change.
These are around 10% off for cash, and no, it did still include a GST component on the receipt.
Good to know.I noticed the same discount in some restaurants too.
How? I don't get it….