PSA: Least Cost Routing Change Effective Sept 2024 - Apple Pay May Not Support Choice of Payment Network

soan papdi on 23/09/2024 - 19:04
Last edited 23/09/2024 - 19:28 by 1 other user

This is specifically about Apple Pay (and likely any tap to pay) with Debit Cards. This post is irrelevant to Credit Cards.

Simply put, if you want to avoid the tap-to-pay surcharge at any merchant, you must insert your physical debit card and choose SAV (maybe CR too). Even if your Apple Wallet shows "eftpos SAV" as the chosen network, the merchant is able to route your transaction via VISA/Mastercard and the surcharge might be passed on to you.

According to Up Bank's Support, the RBA has removed the option for consumers to choose the network when tapping to pay. You can still choose the network when inserting your debit card but obviously that does not work for Apple Pay (and possibly for Google Pay too) and any time you tap to pay.

Financial Apple Pay

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b3au on 23/09/2024 - 19:15

Detailed at Apple Support, updated September 19 - https://support.apple.com/en-au/118269

Apple Pay in Australia
In Australia, you can add eligible dual-network debit cards to use Apple Pay on eligible devices.
A dual-network debit card allows payments to be processed through the eftpos network or one of the international debit networks, Mastercard Debit or Visa Debit.
When you make a transaction in-store, the merchant chooses whether the transaction made by a dual-network debit card will be processed through the eftpos network or the international network.
- soan papdi on 23/09/2024 - 19:22
  
  Correct, you can add but no more option for us to choose the network when presenting the phone for payment.
- AustriaBargain on 23/09/2024 - 20:30
  
  The merchant chooses, but the person at the point of sale probably has no idea.
askbargain on 23/09/2024 - 19:26

+4

RBA should just make eftpos free and force merchants to not surcharge eftpos
tonester on 23/09/2024 - 19:30

Similar information here https://www.easystreet.com.au/news/important-changes-to-appl…

What if I have an iOS/WatchOS older then iOS18/WatchOS 11?

Both existing and newly provisioned Community First Debit Cards in Apple Pay with an iOS/WatchOS older then iOS18/WatchOS 11 will continue to have user choice.
- soan papdi on 23/09/2024 - 19:43
  
  Up Bank's Support team tells me, even if Apple Pay shows you networks to choose, it might not be honoured by the merchant.
Counter Intelligence on 23/09/2024 - 22:36

Eftpos is expensive on small purchases compared to Visa/Mastercard.

Other another note: You often see a sign stating "$10 minimum for EFTPOS", but depending on who's serving you, they might interpret it as a $10 minimum for all card payments. Usually, the boss knows what it means, but some employees may not fully understand.

These days, I’d rather avoid the awkwardness of having everyone grumble at me in line for holding a $6 pack of Tim Tams and then having to head back to the aisles. With inflation, it’s becoming easier to consider grabbing one extra item to meet the minimum.
- soan papdi on 23/09/2024 - 23:00
  
  Eftpos is expensive on small purchases compared to Visa/Mastercard.
  
  I paid $6.10 for a coffee and had zero charges on top for eftpos. Is usually 7c for Mastercard. Don’t understand how it’s more expensive.
  - pangwen on 24/09/2024 - 05:53
    
    You had zero charges. @Counter Intelligence is referring to the expense incurred by the merchant. For those merchants who are not on a flat rate fee system across all cards (e.g. square, which charges 1.x% for all cards, no matter EFTPOS or credit), the usual fee structure is that EFTPOS is a fixed fee per transaction (in the realms of 20-30c per transaction depending on your specific merchant agreement) while credit card fees are usually a percentage of the transaction value.
    
    For a $6 purchase, even a 20c EFTPOS fee charged to the merchant is effectively a 3.3% fee which is higher than the Mastercard fee you were passed on.
    - soan papdi on 24/09/2024 - 06:36
      
      +1
      
      If that’s the case, why are EFTPOS charges never passed on to the consumer whereas visa and mc charges are? Not talking about square terminals, rather the pos devices at most shops.
      - Trance N Dance on 24/09/2024 - 10:47
        
        @soan papdi: Because making a 20-25c fee to use EFTPOS seems petty whilst a X% charge seems reasonable and proportional.
        That or the merchant has already factored in the minimum 20-25c charge into their pricing/consider it a cost of business.
        
        soan papdi on 24/09/2024 - 10:56
        
        @Trance N Dance: I'm not debating you or trying to prove you wrong, just trying to understand the logic.
        
        Because making a 20-25c fee to use EFTPOS seems petty whilst a X% charge seems reasonable and proportional.
        
        In my coffee example, a merchant is willing to absorb 20-25c for eftpo but they want to pass on 7c which is a proportional charge?
        
        That or the merchant has already factored in the minimum 20-25c charge into their pricing/consider it a cost of business.
        
        If they've already raised prices by 20-25c, then why pass on 7c? Are VISA/MC charging 25c + 7c? That's unlikely as it's much higher than 2%.
        
        Trance N Dance on 25/09/2024 - 23:29
        
        @soan papdi: Some merchant providers charge a set fee plus a percentage. Haven't looked at the rates recently but I recall square, and whatever other ones that try to sell their services as an integrated POS system having a set fee plus percentage.
        
        At the end of the day it probably just comes down to psychology, a set fee on a small purchase seems excessive however a small percentage seems reasonable. As a merchant you'd want to pass on as much costs onto the buyer to maximise profit.
- DogGunn on 25/09/2024 - 18:08
  
  It's actually the other way around. Eftpos is more often than not a fixed fee, whereas debit scheme cards (Visa MC) are increasingly becoming a percentage fee.
  - b3au on 25/09/2024 - 18:10
    
    +1
    
    Arguably you could say eftpos is increasingly becoming a percentage fee too ;-)
packeteer on 24/09/2024 - 13:41

love the convenience of tap to pay with my phone, but sick of the charges. cash is king!
DoctorCalculon on 24/09/2024 - 22:10

Does that mean I will start to see a decline in my 2% cashback from using my HSBC VISA Debit Card when shopping at Coles or Woolies?

I don't see the EFTPOS SAV option for my HSBC debit card within my digital wallet as I do for Up and UBank.
- soan papdi on 24/09/2024 - 22:54
  
  It’s likely you were not getting the whole 2% all this time if merchants were charging the extra 0.5-2% on top.
  - DoctorCalculon on 24/09/2024 - 23:35
    
    It’s likely you were not getting the whole 2% all this time if merchants were charging the extra 0.5-2% on top.
    
    That only happens at ALDI with their 0.5% surcharge on non-EFTPOS transactions.
    
    I was asking about Coles and Woolies as most of their terminals are programmed for LCR.
    - soan papdi on 24/09/2024 - 23:37
      
      LCR or not, Colesworths don’t charge extra for any card. So your 2% should continue as it did
- DogGunn on 25/09/2024 - 18:08
  
  No, the 2% currently still gets honoured when it goes via eftpos provided it is tap and pay.
  - DoctorCalculon on 25/09/2024 - 23:45
    
    Good to know. All this time I have been paying the 0.5% surcharge at ALDI.
    
    However, I don't see the EFTPOS option for my HSBC Debit Card in Apple Pay.
    Do I need to contact customer support?
    - DogGunn on 26/09/2024 - 11:14
      
      I'm not sure - my experience has been when tapping the physical card (because I use Android, and it doesn't have eftpos function). If the merchant chooses to send it through eftpos rather than Visa, it still gets the 2%.
      
      i.e. both the transaction and the cashback clear instantly
    - soan papdi on 01/10/2024 - 21:36
      
      However, I don't see the EFTPOS option for my HSBC Debit Card in Apple Pay.
      
      AFAIK this depends on the agreement between the bank and Apple. Up shows the choice but ING does not, despite both being dual network cards. After iOS 18 it doesn't matter anyway, merchant makes the choice for you
      - b3au on 01/10/2024 - 21:38
        
        @soan papdi: I don't believe ING ever supported dual network cards in Apple Pay anyway.
        
        soan papdi on 01/10/2024 - 21:40
        
        @b3au: 100% sure recall seeing ING as dual network in my iPhone for a few months and then it disappeared. I then thought it was a dream till I saw it with Up 2 months back.
        
        b3au on 01/10/2024 - 21:41
        
        @soan papdi: I don't recall seeing it ever - I assumed they never bothered to participate:)
        
        soan papdi on 01/10/2024 - 21:51
        
        @b3au: Maybe I am thinking of UBank? This is making me doubt my sanity.
        
        DoctorCalculon on 02/10/2024 - 01:31
        
        @soan papdi: UBank has now removed the options. Only my Up card shows it.
        I don't see the options for UBank in iOS18, and the feature is kind pointless in iOS18 if the merchant makes the decision.
fowl on 19/10/2024 - 12:58

I understand merchant choice least cost routing when using a physical card, as there's no real (good) opportunity for the consumer consent, but what's the justification for removing the consumer's choice when there's it's very clear and straightforward?
- soan papdi on 19/10/2024 - 13:09
  
  As per the RBA
  
  When a merchant (e.g. a shop or business) accepts payment from a customer via a debit or credit card, the merchant is charged a fee by their bank or payments provider. The Rserve Bank of Australia (RBA) has decided that the Merchant should be able to choose how the transaction gets routed as they are the ones who are incurring the fees
  
  The unfair bit for consumers is that many businesses choose to pass on the fee even though consumers don’t have a choice in the routing. I don’t understand how the RBA reconciles these two aspects.

PSA: Least Cost Routing Change Effective Sept 2024 - Apple Pay May Not Support Choice of Payment Network

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