Thread: Surcharge

I got caught out with this a few months ago when paying for a car service. Apparently by touching the card it treats the transaction as a credit transaction rather than as a debit transaction and some retailers charge the associated fees. It’s a bank thing apparently.

This is probably because the merchants bank charges paywave(?) transactions at the same rate as credit card payments whereas if you insert your card they charge the debit card rate. Just another way that the banks squeeze a little bit more profit out of us.

In Sydney at least, many smaller businesses charge a surcharge if what's being purchased is under say $10.

The credit card company charges companies based on a volume and a minimum value

Interestingly the shop up the road doesn't charge xtra for paywave
Maybe they're with a different bank?
Log Dog

Unlikely that a small business could reduce the fees. I work with top asx companies and they still get slugged in the same way.

Some business just absorb the cost themselves to keep customers happy.

I knew a lovely little pasta shop (since closed down) that was so afraid to increase his prices as he thought customers would walk away, even though the quality was excellent, customer service was great and the prices were dirt cheap!

Originally Posted by taz01

In Sydney at least, many smaller businesses charge a surcharge if what's being purchased is under say $10.

The credit card company charges companies based on a volume and a minimum value

The servo charges surcharge regardless of the level of spend
Log Dog

Cash!

All Paywave transactions are processed through the credit card system irrespective of card type waved. If you insert the debit card in the terminal instead of waving it, it is treated as its card type. ALDI for instance will surcharge all use of a credit card and a debit card on paywave, but will process the debit card without surcharge if you insert it for EFTPOS. Other retailers can do the same.

Q&A: Payment surcharges | ACCC

Originally Posted by Fuzzie

All Paywave transactions are processed through the credit card system irrespective of card type waved. If you insert the debit card in the terminal instead of waving it, it is treated as its card type. ALDI for instance will surcharge all use of a credit card and a debit card on paywave, but will process the debit card without surcharge if you insert it for EFTPOS. Other retailers can do the same.

Q&A: Payment surcharges | ACCC

Thanks for your reply fuzzie
i suppose a lot more folk are using paywave now
Convenience and maybe to avoid touching a device that could have covid residue all over it!
Still not sure why a surcharge exits in the first instance
Banks are fleecing us punters i suspect
Log Dog

Originally Posted by Log Dog

......
Still not sure why a surcharge exits in the first instance
Banks are fleecing us punters i suspect
Log Dog

Using cards has historically been more costly to the banks as well as the vendors and the customers than it is today and the CC costs have reduced substantially over the years to match, although somebody still has to process it all at the end of the day and that still comes at some cost. Larger retailers mostly don't surcharge credit card payments because it's probably cheaper for them in processing than having to physically handle large sums of currency. Credit card processing has become cheaper over the years but still has a lot of costs (and features) not associated with other direct debit and cash payment systems. A lot of people fleece you along the way, I doubt Banks are the worst culprits with all the other buy now pay later offerings out there.

One of my peeves is tradies who offer to drop the GST if you pay them in cash. If you pay them cash they don't declare the income at all so they don't pay income tax as well as not processing just the GST. They're skimming the system in multiple ways. If they offered say a 25% reduction for cash then maybe they would be more believable.

Originally Posted by Fuzzie

Using cards has historically been more costly to the banks as well as the vendors and the customers than it is today and the CC costs have reduced substantially over the years to match, although somebody still has to process it all at the end of the day and that still comes at some cost. Larger retailers mostly don't surcharge credit card payments because it's probably cheaper for them in processing than having to physically handle large sums of currency. Credit card processing has become cheaper over the years but still has a lot of costs (and features) not associated with other direct debit and cash payment systems. A lot of people fleece you along the way, I doubt Banks are the worst culprits with all the other buy now pay later offerings out there.

One of my peeves is tradies who offer to drop the GST if you pay them in cash. If you pay them cash they don't declare the income at all so they don't pay income tax as well as not processing just the GST. They're skimming the system in multiple ways. If they offered say a 25% reduction for cash then maybe they would be more believable.

Yeah, dodgy pricks. I'm surprised so many are.so upfront about it. "Oh you need an invoice? That will be 10% more." Report em!

I refuse to go to businesses that only accept cash. There is a good fish and chip shop that I won't go to because of this. The only reason to only accept cash is tax fraud.

Re surcharges: processing fees used to be ridiculous but have come down substantially.
Reality is that handling cash comes with significant cost. Staff member to take money to bank. Theft (by staff, by public).

My view for my circumstances.

Cash - unless it is counterfeit, you have got paid immediately. No waiting for clearance, no bank fees and can be used at thousands of places. Used to buy more materials, tools, food and drink.
Cheques - a fading commodity. Always risky of bouncing. Need to wait for clearance. The hardest is when the cheque is in the mail.
Electronic payments. When it works it works well. Tax Office loves it as there is a paper(less) trail. There can always be surcharges hidden. Does not work when there is a system failure, be it a computer, internet, communication, power or a combination of factors. For very small traders such as my self, the overheads are probably more than what I would be making on a job to use a couple of times a week.

If I send out an invoice I then wait days or weeks for it to be paid and sometimes it is not paid. If I get cash when the job is complete, then I know I have payment.

For me, cash is king. And yes I do have an ABN and declare cash payments.

I knew the guy at Visa (Bob Lynn) who developed the infamous 'Visa-Def' protocol. It was the one used worldwide on the dial up modem card processing terminals. It is still used today but the transaction is encapsulated in the IP protocol and travels over the net. Conversations with Bob were a real education in the finite details of credit card authorization and processing. Because Visa is only a repository of Bank Numbers and Credit Card numbers, all expenses for operations are paid by member banks. Back in those days (late 1970s - early 1980s) the initial goal was electronic authorization for everything over $100. That gradually became over $25 and finally today 100% authorization.

Today the fees are calculated as a percentage of the sale and $0.25 per transaction. If you are a really big retailer establishment the fee may be as low as 3%. However typically the fee is 3.5% to 4.5% for most retailers. American Express, from what I've heard is 5% to 6%.

So, one of my local fast-food joints offers "free" delivery. I was in field marketing for too many years to know that "There ain't no such thing as a free lunch."

The unmentional free delivery is by an unmentional third party corporation. I order through the web and charge my Master Card. I drive over and pick up my food. A month later the Master Card bill comes in with the ammount as expected but from unmentionable. Here is what really happened. Master Card hit the fast-food joint for credit card processing 3.5%. The unmentionable service took another 6% to 8% for delivery and to process my credit card but not deliver anything. The fast-food joint paid 9.5% to 11.5% to process my payment. The fast-food joint already has some of the lowest menu prices in the area. To have unmentional bring the costs for card processing to over 10% hurts me and I'm only a customer. Lately I'll drive over, place my order, pay cash and then wait the 5 minutes for my food to go

I forgot to mention that the bank card was pioneered by Bank of America (About 1959 or 1960) and bank cards had the Bank-America logo on them as "Bankamerica Card". I think that the Bank-America-Card was developed as a "You are approved for a loan any time card". This later evolved into the Visa / Master Card of today. Most banks didn't want the Bank-America name on their cards so the Visa name was developed.

A while back I was CTO for a credit card clearance firm. The volumes and dollar-amounts per day were huge.

Fraud was way way way out of control.

Most countries were between 1.5% and 3% of ALL transactions that were outright fraud. Other countries (Russia, China, some middle east and the USA) were upwards of 18% on some merchants and some purchases.

The Ruskies were easy, as were the Baltics... their fraud was simple and easily detected.... the very worst was the USA. Most of the charge backs and fraud were from the actual owners, their friends, family and other backstabbing stuff. The rate of fraud on Buy-and-"Not Delivered" or Porch Pirating was absolutely out of control.


I would say, however, that we were not immune. One stat that stuck in my mind was the CBA was subject to 1 million per DAY in NSW alone. That's one bank, in one state, in one day. This was normal.

Unfortunately thievery and criminality really did seem to pay.

BTW, the cops, feds and other gov agencies had zero interest in the fraud data I could generate. None. Nil. Zip. It was infuriating.