I don’t know what the point of the change is.
Before this change we already had a law to say that any surcharge must not be greater than the associated costs (and so it was illegal to be dishonest about the surcharge); and we had a law to say that the surcharge must be clearly advertised in advance of the say (hence all the signs and stickers warning people about a surcharge when it exists).
So from my point of view, that was fair. The surcharge was clearly associated with the cost of using that form of payment. But now, under the new system, the cost of that form of payment still exists but is unavoidable for the customer. I guess there’s marginally less thinking involved for people who never pay with cash, but aside from that I don’t see a benefit.
The article mentions that the RBA said removing the surcharge would “support a more efficient and competitive payments system”. But to me it seems to do the opposite. Suppose for example that a cheaper payment system arose. Previously businesses could have different surcharges for different payment systems, and customers could choose the cheapest. That is no longer the case. So then even if a more efficient and competitive system is created, it will be difficult for it to gain traction. Right?
Also, while this particular surcharge is being banned, others, such as weekend pricing, are not. So it’s not like surcharges are gone completely. Only this type of surcharge is being removed.
and we had a law to say that the surcharge must be clearly advertised in advance
Except it never was.
The surcharge was clearly associated with the cost of using that form of payment.
Except that the cost of handling cash is many times greater than the cost of using debit cards.
The point is that in practice, these charges had no purpose other than hiding the true cost of the product from the vast majority of customers whom they know are paying by card. It’s deceptive. The same reason we don’t allow tax to be added at checkout, and that we ban mandatory drop pricing.
The article highlights that anyone can offer a discount for cash.
It’s literally just flipping to cards such that instead of an increase to the sticker price for electronic payments, you get a decrease in the sticker price for cash payment.
So to clarify the question, the point of the change is Australia maintains the you don’t pay more than the sticker price rule.
And yes, weekend and public holidays surcharges on menus annoy the shit out of me and should be banned too.
Just a reminder that the law actually says weekend and holiday surcharges must be clearly stated in the menu at least as prominently as the most prominent item on the menu. So if it’s down the bottom in fine print, or if it’s the same size as normal menu items but they have specials extra large, you can tell them to stuff it.
So the core idea that although cash was the normal method of payment in the past, now card is the normal method of payment. Thus when card price and cash price are different, the card price should be the one listed - not cash price. Is that the gist of it?
I mean, I think that’s a reasonable argument. But as a counter point, cash is still the government supported standard; whereas other payment systems are processed by some third-party foreign company (such as Mastercard) - hence the fee.
I guess in the end it doesn’t really matter much. Maybe hiding the details makes for a better experience, but maybe it just entrenches the power of established transaction companies. I guess we’ll just see how it pans out.
whereas other payment systems are processed by some third-party foreign company (such as Mastercard) - hence the fee.
we should really have pushed a much greater use of eftpos for electronic transactions. eftpos is Australian and doesn’t rely in the fickle US Government
https://squareup.com/au/en/the-bottom-line/managing-your-finances/how-does-eftpos-work-australia
Different rates for different payment methods is daft.
“When card surcharging ends, the sticker price will be the price that consumers end up paying,”
So keen for this. The number on the sticker should never be larger than the amount I pay. It’s that simple.
I genuinely cannot understand the issue and the dismissive attitude some people seem to have about this concept.
I mostly agree, but it would be way better if we provided an at cost-service.
This is infrastructure we’re allowing private companies to extract profit from.
Until we have such a at-cost service, I’m of the opinion we should pass on 100% of the card fee, as determined by the card issuer (not the terminal), incentivising people to ditch rewards and BNPL cards.
Square charging businesses a flat rate would have to be undone for this to work.
I mean the RBA cut the credit card cap here from 0.8% to 0.3%. EFTPOS is down to 0.16% I’m pretty sure this places us near the lowest card fees in the world now.
Last I checked, the cost of cash handling here was over 1% of a transaction.
Does that apply to the payment provider (the services that provide the terminals, etc?)
Or are we just relying on the “free market”, which failed until this intervention, to re-price their services now that card fees are lower?
Genuinely curious as I couldn’t find the info
You’re forcing people paying cash to subsidize your service fees. They did not get rid of the fees, they just rolled them into the prices.
No, people paying by card are subsidising the cash users. The cost of handling cash is an order of magnitude greater than the debit card fees.
To be entirely fair (and I say this as someone who uses cash 95% of the time) cash also has processing costs, not sure what the fees were in oz but I have a inkling they were likely taking the mick with it.
I think it is reasonable for there to be a requirement for a reasonable fee-free way to get that price (and even an electronic way).
But saying that a merchant’s options are to not accept a payment method, or to accept it and pass the fees on to all consumers, is effectively playing into the hands of the big American card networks, and is not a pro-consumer action long term at all.
What happens then is:
- Networks incentivise people to pay using their cards, e.g. by providing small kickbacks.
- Networks start raising the rates on merchants. Merchants pass on the costs to consumers. Consumers who get the kickbacks get a cheaper effective price than cash-paying consumers, but more of the rates go to the network. So cash paying consumers are significantly worse off than if the fee could be passed on, card paying consumers are a bit worse off, and the networks are profiting from it.
- Merchants can’t stop offering the ability to pay by the network’s card at this point without losing a lot of business.
- Other networks cannot enter the market (and even get pushed out) by competing on price because then they can’t offer the kickbacks. Consumers of the new cheaper method would still be cross-subsidising the fees of the other cards, while not getting the kickback.
- Card networks gain power from this duopoly, and use that to decide what types of business are allowed and what is banned or censored, essentially setting the de facto laws of commerce with no democratic input.
This whole thing is one of the late stage capitalism anti-public dynamic that America has (alongside things like the American way of doing tipping) that we should be fighting tooth and nail against. The RBA and Labor should never have allowed this.
“fee-free way to get that price”
What does this even mean? Money handling has been a cost in currency based society since forever. Long before credit cards, business baked their cash processing costs into their goods and services.
Also, read the article. They are 100% allowed to offer a discount for cash payments. Hell they are allowed to offer a discount for electronic payments and charge full rate for cash. Paying less than the sticker price has never been an issue.
No hidden taxes tips or fees. It’s a core tenant of Australia, I should never pay more than the sticker price for an item or service.
Lastly, everything I have read indicates that the card rewards systems are suffering and getting worse as a result of this change. But I doubt they will ever die fully (unfortunately).
It’s a core tenant
Tenet
I think you got this the wrong way around:
The number on the sticker should never be larger than the amount I pay. It’s that simple.
Indeed I did. The cost should never be larger.
Out of pocket cost ≤ sticker price.
I live in the US. Some cities have banned credit card surcharges. The bans have been wholly ineffective and achieving the desired result. I’ll illustrate what happened at my local ice cream shop. This is a real example and not made-up for this comment.
An ice cream sundae costs $4.64. There is a 3% cash discount. So it’s $4.50 when paid in cash and $4.64 when paid by card.
This is a credit card surcharge but by another name. And legal according to the rules of Australia’s scheme as well. The only real thing that can be done here is to not patronise businesses who impose a surcharge that you think is unfair.
That sure sounds like the desired result to me. The big sign on the ice cream stand says $4.64. Then I go and buy an ice cream I get charged, exactly $4.64, clear and simple. Mission fucking accomplished.
Oh I have cash in my back pocket, and I get a discount for that, sure mate, I’ll happily pay a bit less than I was planning to pay anyway.
Are visa and MasterCard overcharging in their duopoly, yes. But that’s not this battle (and they capped their fees a year or so ago in Aus to help combat that too).
I bet all the prices that end with a .99 will stay that way. The ticket price on the shelf must match the card price at the register.
i think what will happen, and this is a real world example for a coffee… today., the large coffee is listed as $5.20, i get charged $5.28. tomorrow, it will be listed for $5.40
Follow up on this comment: I wasn’t far off, the coffee is now priced $5.30
That’s just taking an opportunity to increase prices, like all the petrol stations that hike prices the same day as something happens in the middle east, long before any cost increases make their way down the distribution chain.
Same as what happened with the introduction of GST. My kebab shop raised the price from $4.00 to $4.50.
Should have been $4.40
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Its nothing to do with covid. That’s just the time that tyro popularised the idea.
What actually is the desired result? I figured it’s to remove another barrier to people moving away from cash payments
Legislators don’t care about people using cash.
Predictable pricing is better for consumers. There’s nothing worse than additional fees at the register. Some countries got this wrong and figuring out how much something is going to cost is a real mess. Like price plus tip plus tax plus payment fee.
I don’t have a gripe with a fair transaction fee. I do have a gripe with the scope and creep of these things. This is needed or we would end up like the USA. A menu price + tax + tips + card fee etc it gets to be irritating adding up all the time.
The amount of cardboard signs at the coffee shop till of + card surcharge, + sat surcharge and tipping culture sneaking in etc. Before we know it there will be an additional fee for the spoon and a table if you want to use it. Stores should account for this in base pricing.
I think also this is being viewed for most in the context of coffee culture where surcharges are actually sneaking into other areas like paying rent or paying for activities. This is invasive and can amount to more than a few $$$
Sat charge?
Usually a 10 - 20% surcharge on Sundays supposedly to support the increased weekend wages. Some places have them for Saturdays too.
Increased weekend wages??
Yeah hospitality workers get something like time and a half on Saturdays and double time on Sundays in most industries I think.
Yes Sundays and public holidays incur a extra payment for hospitality staff (15% I think). So lots of spots pass this on as a surcharge on those days. Some build it in. Its common to see a small sign on the door or at the till notifying you that you will incur this.
Which is stupid unless you eliminate surcharges on the shop side
This just forces sellers to accept the additional costs
Plenty of shops already factored it into their pricing
Yeah. They are… but it basically just is extra profit for banks,
Stock photo that tap to pay is on the other side of the card.
