Gov. targets unfair credit card surcharges

[clazman]

What i don't get is the government can control the banks and dictate charges, but they seem to be able to do nothing with the petrol companies who continue to hike prices when they want

 

[exceladdict]

I agree that prices should be all inclusive generally. Nothing more annoying than a surprise surcharge, whether it's credit card or other!

 

[ComeFlyWithMe]

As a business owner, I don't have to accept cards, but if my customers wish to use one, I will charge them what it costs me to process it.
Due to our business having low volumes but high value sales, this could be anywhere from 1.4% to 2.4% depending on the card.
The point is, if the surcharge reflects the actual cost then I believe it is warranted.
There is no justification for 5.5% or even cabcharge's 10% under any circumstances in my opinion.
I simply cannot put up all my prices by a variable margin of between 1.4 and 2.4%, and most items have a margin of as little as 10%, so this can be a big hit to the bottom line.

 

[OzEire]

Commonwealth bank has prohibited merchants that use their terminals to impose a minimum and add unreasonable surcharges, it's good to see banks taking action as well.

Plenty of examples of CBA terminals where this is not enforced. Thanks for the tip, I might let CBA know next time I see one.

 

[Buzzard]

I can't see that happening. I go out of my way to avoid businesses that have an eftpos minimum or surcharge and I know a lot of others that do too.

Commonwealth bank has prohibited merchants that use their terminals to impose a minimum and add unreasonable surcharges, it's good to see banks taking action as well.

But how do you know who is with Com Bank?

 

[Hvr]

As a business owner, I don't have to accept cards, but if my customers wish to use one, I will charge them what it costs me to process it.
Due to our business having low volumes but high value sales, this could be anywhere from 1.4% to 2.4% depending on the card.
The point is, if the surcharge reflects the actual cost then I believe it is warranted.
There is no justification for 5.5% or even cabcharge's 10% under any circumstances in my opinion.
I simply cannot put up all my prices by a variable margin of between 1.4 and 2.4%, and most items have a margin of as little as 10%, so this can be a big hit to the bottom line.

So do you offer free (to the cust) options? I'm guessing the only truly free one (excluding time) would be bank transfer?

 

[Buzzard]

I agree that prices should be all inclusive generally. Nothing more annoying than a surprise surcharge, whether it's credit card or other!

Don't agree with all inclusive. Why should someone paying cash be penalised?

 

[Hvr]

Don't agree with all inclusive. Why should someone paying cash be penalised?

Paying by cash is very expensive and risky to the business. Arguably more so than by various card options.

 

[Dr Ralph]

Don't agree with all inclusive. Why should someone paying cash be penalised?

No payment method is without cost to a business.

 

[ComeFlyWithMe]

So do you offer free (to the cust) options? I'm guessing the only truly free one (excluding time) would be bank transfer?

We offer free EFT and BPay from bank accounts. All of our transactions are invoice based, as we are not a retailer. The BPay costs us $2.50 per transaction at present, soon to go down to $0.88.

 

[ComeFlyWithMe]

No payment method is without cost to a business.

Receiving EFT costs my business nothing. Our statements are streamed daily to our finance system and payments are reconciled against the invoices the same day.

Yes there are indirect costs with any payment method, however this discussion is about direct costs.

I do note however, for credit card surcharges, the business is currently permitted to pass on indirect costs also. We don't, but many do.

 

[ComeFlyWithMe]

I can't see that happening. I go out of my way to avoid businesses that have an eftpos minimum or surcharge and I know a lot of others that do too.

Commonwealth bank has prohibited merchants that use their terminals to impose a minimum and add unreasonable surcharges, it's good to see banks taking action as well.

So you think it fair that for you to buy your $1.50 stick of gum, that costs the merchant up to $0.60 in merchant fees and you think that's your right?

I don't think the businesses in question will miss you to be honest.

 

[exceladdict]

So you think it fair that for you to buy your $1.50 stick of gum, that costs the merchant up to $0.60 in merchant fees and you think that's your right?

I don't think the businesses in question will miss you to be honest.

Im actually quite interested interested in how merchant deals are structured for different businesses. I was always under the impression that supermarkets etc are low % but high volume, other FMCG companies similar with a minimum fixed cost (often enforced via an eftpos minimum), etc etc. But I'm sure they're secrets guarded by an NDA.

 

[basso]

Paying by cash is very expensive and risky to the business. Arguably more so than by various card options.

There are many studies into the costs of various forms of payments that disagree with you, at least as far as credit cards are concerned. Credit cards nearly always come out more expensive than case. Debit cards are a bit different....

 

[trippin_the_rift]

Receiving EFT costs my business nothing. Our statements are streamed daily to our finance system and payments are reconciled against the invoices the same day.

Yes there are indirect costs with any payment method, however this discussion is about direct costs.

I do note however, for credit card surcharges, the business is currently permitted to pass on indirect costs also. We don't, but many do.

There are clear disadvantages to an invoicing system with no cards involved. Slower payments, paying staff/third party suppliers to chase up payments, higher chance of delinquent payments to name a few. Personally I like the idea of cash sitting in my bank rather than in my customers account for 30, 60, 90, 120 days and less than 1% is a small cost to pay to make that happen. If you remember back in the day it was normal for suppliers to offer discounts if paid early - similar to CC%.

I don't like any businesses that charge CC no matter who they are. Hilton is a good example they turn me off in Australia.

 

[burmans]

Paying by cash is very expensive and risky to the business. Arguably more so than by various card options.

See second bullet point

http://www.rba.gov.au/payments-syst.../paymts-sys-rev-conf/2007/7-payment-costs.pdf

 

[yohy?!]

Receiving EFT costs my business nothing. Our statements are streamed daily to our finance system and payments are reconciled against the invoices the same day.

Yes there are indirect costs with any payment method, however this discussion is about direct costs.

I do note however, for credit card surcharges, the business is currently permitted to pass on indirect costs also. We don't, but many do.

its likely you have competitors who do not surcharge who would already enjoy a % of your potential customers who prefer to use their payment method without penalty, many b2b transactions now are done by businesses looking to improve their cashflow and use rewards. it would be worthwhile taking that lost business into account when deciding whether you should surcharge.

personally i impose a 3% penalty when calculating price on any business that will not accept credit cards to reflect the loss in return on rewards points not able to be earned, any surcharge would be factored against that also.

 

[$CJ]

I thought the RBA tried to solve this several years ago. Hopefully this will finally fix things.

Actually it was the complete opposite back then. IIRC it was about allowing more freedom to charge surcharges - i.e. more equitable if paying cash - rather than having cash transactions subsiding CC transactions due to banks starting to strong-arm in zero-surcharges.

Since then we've had changes to makes things more transparent, i.e. prices must include any mandatory surcharge - which is why airlines each have some obscure payment method with no fee.

 

[ComeFlyWithMe]

its likely you have competitors who do not surcharge who would already enjoy a % of your potential customers who prefer to use their payment method without penalty, many b2b transactions now are done by businesses looking to improve their cashflow and use rewards. it would be worthwhile taking that lost business into account when deciding whether you should surcharge.

personally i impose a 3% penalty when calculating price on any business that will not accept credit cards to reflect the loss in return on rewards points not able to be earned, any surcharge would be factored against that also.

I am in the fortunate position to not be concerned whether they take their business elsewhere. Our main clients are under contract, and have contractual payment terms including method. We don't chase money, we withhold services until they pay.

While you may decide to penalise your suppliers, that will not make for a very good long term partnership in my opinion. Others may take a slash and burn approach, but you will get the service you deserve from your business partners with that approach.

 

[wandering_fred]

Being the cynical type and remembering my marketing and business ethics courses of many years ago, I would hope the ACCC will be able to identify and control the following (by the airlines)

1. General $7 domestic and $30 international price increase.
2. An $xx_ discount if paying by Poli/BPAY

Magically no credit card surcharges.

Happy wandering

Fred

PS Up until this year most of my QF tickets were purchased exSIN... with no surcharges.