I hate that we're heading towards a world where Visa, Mastercard, Google and Apple basically control all our money and payment systems. And everyone is enthusiastically embracing it!
this post was submitted on 11 Aug 2023
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You have to have some system where every vendor from the taxi driver in wellington to the chinese supermarket in auckland to the stand selling noodles in singapore can take your money and give you what you want. You think this can be done with a mom and pop operation? You think it can be done without a centralised system?
People talk about how crypto can solve all this but the same people can't agree on what crypto to use and have no idea what the transaction rate of global payments are or the fact that transaction costs in most crypto payments are outrageously high.
Is this not already controlled by the banks?
Yeah, because I don't even need to take the card out of my wallet.
It would be incredibly simple for the reserve bank to set up "Kiwicoin" or whatever, and tie it to EFTPOS.
What alternative is there? The wild west of crypto?
I'm honestly surprised with that graph. Over the last few years there has been a huge uptick in credit surcharges, I've started using EFTPOS a lot more because of it. Perhaps that's represented in the flattening of the decline rather than the increase in EFTPOS use that I expected.
This always bugs me because businesses charge customers for the fees when they should be taking the responsibility for them internally.
In a cash business, a person is paid to count tills and ensure money matches up. Then, someone has to do a bank run and deposit that cash. This takes time and labour. This is not directly charged to the customer as a service fee.
Meanwhile, Stripe or whatever payment processing platform a business uses does all of that for a business, and charges the business a fee. This includes a ton of value added services such as financial overviews and analytics, traditionally something an accountant on payroll would work on.
Businesses should be eating the cost as it's cheaper than equivalent billable hours for an accountant or allocating labour to count, manage, and deposit cash. I'm all for cashless businesses but it should be the owner's responsibility rather than fees for customers.
I have a small business plan with Stripe and I'm charged 0.40 cents + 0.4% per card transaction. A bit more for certain types. It's cruel that these businesses are charging more than that to the customer, I assume the larger businesses likely get a better deal than that.
When you go to the supermarket and pay with credit, it's likely only a small percentage fee is being charged. They have huge negotiating power.
When you go to the local cafe and see a 2% charge, this is almost certainly in the ballpark of what the fee is they are paying. Before paywave, the credit card fees were much lower. In the early days there were stories of places being charged 3% or more for paywave compared to 1%ish for credit card transations by inserting the card. This has led to the culture of surcharges. It's crazy greedy on behalf of the bank, and many places do not have credit at all because of it. Having a surcharge allows the business to offer credit to those willing to pay for it.
I feel small businesses are well justified in charging a surchage for such a crazy fee compared to the service provided. Even for your Stripe payments, that's a 8.4 % fee on a $5 payment. In particular, hospitality businesses struggle to compete and break even, and this is the sort of place I mostly see the surcharges.
All businesses build all their costs into their pricing, except for some reason credit card surcharges.
It's odd.
Also, there no way in hell that the cost of an electronic transaction is even a millionth of the cost of the transaction or even proportional to the value of that transaction at all.
Someone's making bank.
All businesses build all their costs into their pricing, except for some reason credit card surcharges.
Surcharges for public holidays (where staff cost more) are common. When you buy something online, you pay for shipping separately even though every item needs to be shipped. Air BnBs often have a mandatory cleaning fee. Air NZ has in the past even charged a fuel surcharge, as if you could somehow fly a plane without fuel.
There are lots of costs that should be built in but aren't. I think these are all examples of things that should be built in more than a credit card fee, since the cost of the service actually changes depending on if you use a credit card or not.
Someone’s making bank.
So mainly it's the bank itself, but it's also important to know that rewards are paid for by the fees. So if you get airpoints or a cash back of 1%, that e.g. 1% came from the 2% fee that you (or the business) paid. Though I myself make a decent amount from rewards, I'd be much happier if there were no rewards and fees were a quarter of the size.
I just spent a month in Europe and tapped-to-pay my credit card every I went, from the center of London to a train station in the south of France to a small cafe in Poland - without a surcharge.
Why are they getting away with it in NZ? Are we just too much of a captive market to do anything about it?
I would guess Europe has competition between banks that lead to much lower service charges. Our small market has ample examples of our lack of competition leading to higher prices.
You make a good point about size of the transaction, the 0.40c fee is much more significant for small, single digit dollar purchases. Another way where a coffee shop is hurt more than a mechanic repair in the hundreds. Mentally, I'm more likely to tap and go for a coffee than an oil change.
I see surcharges at cafes regularly, but not often anywhere else. I spend far more time in coffee shops than mechanics, which might explain it.
Because my experience is largely with surcharges at cafes and other hospitality, this may shape my opinion of them.
Yeah, I think also people are happy to pay for convenience, even small ones (like pay wave vs putting your card and pin into the machine).
Also, I'm guessing it only counts as eftpos if you swipe your card? i.e. if you insert it to read the chip, it's technically not eftpos (I think?)
I don't like the idea of donating to the bank, even if it's only a few cents 😆
I'm pretty sure inserting the card is still EFTPOS, as this is still how it works even if the place doesn't have credit.
The fact that banks charge for pay wave is absolutely absurd to me especially in the age of covid, I had to switch banks when we got a home loan and their eftpos cards don't have pay wave so I was quite happy with that
The idea that we should have minimal government regulation seems insane to me, and I don't understand why anyone would vote for that. Without regulation, consumers get screwed over. I presume anyone voting to remove regulation are doing so on the idea that they are voting to remove regulations they don't like, without thinking about all the ones they benefit from.
We need contactless EFTPOS, in that case.
A choice between swiping my card, swiping it again, wiping the crud off it, swiping a third time, fat fingering the pin, starting over, and finally succeeding in paying?
Or just plonking my wallet onto the pay wave machine? Yeah, I'll take the most convenient option thanks.
Also, have some of these people ever had a conversation with an elderly person? Imagine trying to explain all that nonsense to someone like my mother.
Convenience is exactly the issue. Technology tends to make our lives easier. I don't even have to take my wallet out now, just use my phone. It's just so much easier. The transaction fee thing is annoying, but most of the time it's so small I just pay it anyway, instead of going through the above-mentioned steps to pay with EFTPOS. I'd also add "chose the wrong account and it was declined" to those steps. I use EFTPOS so infrequently now I often forget which account I keep all my money in.
Plummets really?
All this article is saying is that people are using credit cards more that's all.