Why is the fee charged based on the total amount. Surely, it costs no more to charge for a cup of coffee by EFTPOS as it does for a $1,400 dollar car registration.
Credit Card Fees --- Why Based On Transaction Amount?
whyisave on 23/10/2024 - 14:29
Comments
CC Surcharges for customers have been around long before COVID. I'd say 15 to 20 years at a guess.
I m not saying that there was no surcharge ever, shops always absorbed them and rarely charged the customers unless you are buying something for $10k or over.
Something really has gone wrong after Covid that has sparked the debate around surcharges.
Who remembers paying surcharges for payment more than $20 at restaurants and cafes, the shops never argued and were happy with the sale instead of complaining about paying fees to the bank, this is now the thing of past. Prices of everything has gone up, coffee size has reduced and surcharges have to be paid on the top!
True. Unfortunately a lot of stuff works like this when it shouldn't. For example real estate agents.
It's the same with booking fees, when buying tickets (eg. concert tickets, etc.)
Why is the fee charged based on the total amount.
Larger amounts use more data to transfer.
The reason the industry will give you is because it costs them more if the transaction is fraudulent and the customer needs to be reimbursed
They already make a lot of money, from "lending money".
EFTPOS does I believe, for insert type payments and most merchants absorb the very minimal cost. VISA and MC, well why should they when there's no one else to compete with them.
https://www.auspayplus.com.au/brands/eftpos-interchange-feesYou wait until they manage to get us to cashless society stage.
Then they can really screw us with fees, as there will be no option.
I use my card to buy 15 cent bag at the checkout.
That will slow down the glaciers melting.
The poor banks won't make enough money otherwise.
BANK and POOR doesn't go together! 😂
They only made 4 trillion last financial year, have a heart.
Exactly!
Because Ozbargainers love to do chargebacks. The higher the transaction value the higher the risk to the bank. Higher fees is related to the risk involved.
It is because of the reward points. You expect more Qantas points on a $1,400 credit card purchase than for a cup of coffee do you not? Someone has to pay for those extra Qantas points.
For debit cars the cost of processing the transaction is the same whether its small or large. They're just looking up whether you have the money to pay, and giving it to the merchant
But for a credit card transaction there are two component costs. The cost of processing the transaction. And the risk associated with it being a credit transaction.
So perhaps there should be a flat processing fee for all card transactions, plus an additional risk charge if it is a credit transaction.
People blaming banks and not payment processors haha
stupidity knows no bounds
The fees are split between visa/mastercard, the card issuing bank and the payment processor
What flat fee would you suggest?
Because if it was a flat charge the surcharge on your coffee would be $2 (or some other ridiculous amount) to cover the fact the other one is no longer $14 (or whatever it is).
It could be tiered
Sounds like a percentage charge with more steps (literally).
Would still be able to be made fairer, to OP's point. E.g. no fee for <$100, etc.
@FezMonkey: It's never going to be "free". Someone will always have to pay.
Which, in my view, is exactly why surcharging should be outlawed and the cost of transaction processing be just baked into the price as a business operating expense (as the cost of cash handling always has been).
Good point. The marginal cost of electronic transactions is basically zero. It's rent seeking. Same issue with account total % based management fees for super/ETFs/managed funds.
The marginal cost may be effectively zero (if you are literally talking about one more or one less transaction), but the fixed costs are not. And that's before we get to the effective "insurance premium" for card fraud that's built into these numbers.
As noted above, if you have a fixed dollar fee for these transactions (or the management fees you are referencing) it means that the lower value transactions/accounts end up paying more in percentage terms than the higher value ones. Not necessarily taking a side in that argument, but that is the reality.
Its all about making money by the banks!
Credit card surcharges for the customers was unheard of untill after COVID!
Now some of the credit card provides like ANZ has shorten the 55 day payment cycle to 40 days!