Looks like rewards credit cards are going to get a lot more interesting.
Only Visa and Mastercard are included, as per NZ Herald
To be done by May next year.
Government to Ban Card Payment Surcharges for Visa and Mastercard
Comments
The merchants will simply add the fees to their prices. So all transactions will include fees. Even Cash ones. And Eftpos - everything. Expect prices to go up by about 2% or so. Hardly noticeable but it'll happen. Call me a cynic I don't mind.
Yeah everyone is different of course, but I'm honestly fine with it being included in the price. If the price goes up so be it, I will always continue to shop around.
The issue is that other payment methods are much cheaper for merchants than contactless credit cards.
If this ban goes through, it will be back to the situation of 10+ years ago, where merchant's either decide not to accept credit cards at all (was common for dairies as an example to take EFTPOS, but not credit cards), or just build the cost of credit card interchange fees into the price regardless of payment method.
This ban if it happens will make Visa and Mastercard a heap of money. They can offer their cardholder rewards, funded by a portion of interchange fees, and without retailers being able to pass on that interchange fee, it is rational consumer behavior to pay with a credit card so they can get the rewards…
I don't recall prices going down 2% when they started charging surcharges. Odd….
eh ?
So small businesses are struggling and closing in record numbers. Banks are making obscene profits. They've done this wrong. Penalising a business for passing on the costs that are imposed on them. They SHOULD be looking at why the banks are charging the fee in the first place…….
They've done this wrong.
Penalising a business for passing on the costs that are imposed on them.
Yep - the (retail) businesses are, in part, passing on the costs that are imposed on them.
They SHOULD be looking at why the banks are charging the fee in the first place…….
The (banking) businesses are, in part, passing on the costs that are imposed on them.
Whats a easier battle, forcing small business to do this OR fight the banks with their never ending pot of money and legal?
Whats a easier battle, forcing small business to do this OR fight the banks with their never ending pot of money and legal?
Okay - but what's your point in relation to what I posted in my reply to kiwical?
what do you expect. even local farmers through fonterra dont care if a block of butter costs an hours wages.
even local farmers through fonterra dont care if a block of butter costs an hours wages.
Where do you work that pays you $8.30 an hour?
I saw some butter for $11.20 per block yesterday - Anchor I think. This is more than half an hours net wage for someone on minimum wage.
I saw some butter for $11.20 per block yesterday - Anchor I think. This is more than half an hours net wage for someone on minimum wage.
I saw butter at $8.30 per block yesterday - this is less than 36% of the hourly wage for someone on $23.50 per hour.
Your choice to pay $11.20 ($3 or so 'per block' more than you need to, but completely up to you if you want to pay that of course) is still likely way less than the 'hours wages' that huffboy was claiming, unless huffboy is getting seriously ripped off by their employer.
We'll gave to wait and see if they are willing to disclose who that is ;-)
@Alan6984: Not everybody lives the same life as you do. Most people need to pay taxes on that $23.50, and not everyone lives in an area where butter is that cheap.
Someone on minimum wage in my neighbourhood would have to pay $9.90 for a block, or half of their hourly take-home wage. It's not an hour's wages as the person above said, but it's still a pretty hefty sum during a time when people are already struggling.
It's not an hour's wages as the person above said, but it's still a pretty hefty sum during a time when people are already struggling.
No its not, which is precisely what I said above.
Exaggerating in that way just trivialises the hardships that many people face, and really doesn't help.
@Alan6984: What trivializes people's hardships is telling them to just buy butter for $8.30 instead of choosing to pay more, when you don't know if it's a choice.
What trivializes people's hardships is telling them to just buy butter for $8.30 instead of choosing to pay more, when you don't know if it's a choice.
Seems like you are trying to find a way to deflect from the fact that butter does not cost 'an hours wages'.
Stop trying to defend what was a ludicrous statement, that is offensive to hard working people that might not be in such a privileged position as either of us might be in.
I have seen where charges are already added on even when you use cash
I have seen where charges are already added on even when you use cash
Cash is quite expensive to handle though - much more expensive (and risky) than, say, debit cards.
I have no problem if a retailer just refuses to take cash as a payment. If I really wanted to use cash (no idea why I would, but hey), then I would give my business to a retailer that did accept cash.
I wonder how the likes of PBTech are going to deal with this. They used to have 'cash discounted price' which you could use eftpos with and a 'standard price' which includes the surcharge. Will this loophole still exist I wonder?
The ban is on adding the surcharge to in-store payments only.
Online payments will not be covered under this legislation (at this stage) so PB could still add the credit charge surcharge there.another half baked legislation.
The "Cash Discounted price" included eftpos back in the day but i suspect giving a "discount" if you are paying cash will be outlawed.
Wow.
Im always amazed at the number of people who fall for the "poor retailers and their fees" stories. Many of them the "cash is king!!!" types.
Retailers get as much, and likely more, benefits from people using credit cards than the people them. There is a lot of expense in handling cash. More than in the past.
Id note this is nothing new. And was the case in the past. And guess what? Prices disnt come down when it was changed.
Let them threaten to not accept credit cards. And accept the likely loss of business that will come with it for many.
And guess what? Prices disnt come down when it was changed.
This was quite a few years ago, when surcharges were first allowed:
The business I was working in at the time dropped prices by 2% for OTC sales, and added it back as a surcharge for certain cards (I think 3% maybe more for Amex, but we dropped it soon after anyway). A not-insignificant portion of sales moved from credit card to debit card (might have been something like a quarter, but I can't really remember now).
We advertised the fact too - made a song and dance of it (as did many other businesses to be fair).
Don't let the truth get in the way of a good story though :-)
I remember pak and save tried that a few years ago, it didnt work for them and they changed it back in less than a week
Anecdote:
I worked for Noel Leeming for some time and we’d get people price matching with pb. Probably 20% of the time we were cheaper once you added their card fee
RIP Eftpos card
On the topic of EFTPOS card, i tried to replace my old card from my bank earlier this year but they didn't want to give me a regular card with a strip, instead they want to give me a debit card with a chip and paywave for no extra fees, but that means i had to insert everytime rather than swipe which is inconvenient.
The reason they gave was for the added security but i wonder if they wanted me to use paywave more so they get paid more. At the end after I repeatedly turned it down and wanted to speaker to a manager the teller "found" a regular card from the back room.
But you would have to pay a % transaction fee wouldn't you?
The strips are incredibly insecure, probably a good thing they were so persistent to try give you a chip instead.
How so? We still have them on our chipped cards so how does that issue go away with a card that also has a chip?
How so?
I guess its possible there are variations, but I believe that most chips encrypt the communication and authenticate the end point, compared to the magnetic stripe which just blindly provides the info - card number, expiry date etc - which is really no different than when you used to give your card to someone, and they used the old devices that made an imprint including a couple of carbon copies.
That's why we moved away from magnetic stripes in the nineties (the migration actually started in the eighties I think, but it wasn't widespread until a little later) as the chips are more secure.
We still have them on our chipped cards so how does that issue go away with a card that also has a chip?
The stripe is there as a fall-back, but from a security perspective you don't want to use it unless you have no other option.
Ah yes I see, it's in actually using it and the risk of the machine being compromised. Though, if i were a bad actor I'd just have the machine pretend to not work with a chip and prompt you to swipe it.
… if i were a bad actor I'd just have the machine pretend to not work with a chip and prompt you to swipe it.
I'm sure that does happen - you could probably place a small device on or near the reader that would interfere with the comms between the terminal and your card.
In that scenario, the reader might offer to allow you to swipe, but that could also depend on how it was configured - maybe a merchant, the terminal provider, or a payment processor can configure their terminal to fall-back or to disallow that option.
For me, if that happened, I would likely try another card (that wasn't magnetic stripe), but having said that, my first preference is contactless on my phone (Google Wallet), since that generates a one-time / virtual card number for each transaction, so is very secure. The downside is that the fees, up until now (or whenever the changes come in), have sometimes been higher, so I do use Chip & PIN if that is the case. Even if the one-time çard number was captured, it would not be valid to be re-used again. If that isn't available / working, or if the fees are too high, then I have no particular concerns about going 'down' to Chip and PIN, but I would be very reluctant to swipe a card these days.
I haven't looked into it, but you might be able to request a card without a magnetic stripe at all.
People seem to forget these charges are business expenses that can be included in taxes as expenses, so businesses get the benefit of that whilst also on-charging the fees at seemingly nebulas amounts the moment. Better to have them removed and let them make the decision to absorb, increase prices or simply not accept credit cards at all.
People seem to forget these charges are business expenses that can be included in taxes as expenses, so businesses get the benefit of that whilst also on-charging the fees at seemingly nebulas amounts the moment.
Which they pay tax on.
I parked in the city in chch for 15 mins in a wilson carpark yesterday. $2 plus 60 cents for using my cc, not paywave.
I parked in the city in chch for 15 mins in a wilson carpark yesterday. $2 plus 60 cents for using my cc, not paywave.
Was there a lack of competition (no other options or all the other options have the same issue), or excess demand vs supply (all other options were full)?
You dont know until you go to pay. It was a big percentage to be added which was my point. Strangely this is a parking building, not advertised as a Wilsons carpark. Pretty sure it never used to be.
You dont know until you go to pay. It was a big percentage to be added which was my point.
Ah well :-(
Next time take your parking money elsewhere I guess.
I'm happy for the cost of paywave to be added into the price of the products/services, although not fair for rural areas that may not have paywave. and if the price isn't right for me i'll shop around. like if they remove GST on fruits and veges i don't believe the retailers will be honest about it. Same as the Auckland excise fuel tax, there is no way you can tell if you are really getting the savings, this is another media beat up.
I'll continue to take the 5 extra seconds to insert and put my PIN in to save money leaving the small businesses I support to go to the banks… For the debit card paywave use case anyway.
The one thing i don't like about entering pin is there are always people around you including the staff even there are cameras pointed directly to the eftpos terminals and they could all see your pin, the less i have to enter the pin the better.
Someone having your pin isn't really a problem. Unless they are also going to then steal your card I guess. No financial implications for you if that does happen anyway.
The one thing i don't like about entering pin is there are always people around you including the staff even there are cameras pointed directly to the eftpos terminals and they could all see your pin, the less i have to enter the pin the better.
I agree with this, which is a reason why, all other things being equal, I would always prefer to use contactless options.
It is also a reason why you really need to have a different PIN for different cards, and especially the highest risk cards, being the ones that you can put in an ATM and take out your own money (as opposed to it being a cash advanced - loan - on a credit card).
I don't get why the govt didn't just stop banks charging it as an extra fee and have them include it in the cost of business banking. It's not that different to businesses now being forced to include it in their costs instead of charging it as a seperate fee.
With the billions of dollars the banks earn having them compete I'd have thought would be a better outcome. That way they'd also be more inclined to negotiate the best deal they can get with Mastercard/Visa.
I don't get why the govt didn't just stop banks charging it as an extra fee and have them include it in the cost of business banking. It's not that different to businesses now being forced to include it in their costs instead of charging it as a seperate fee.
Please can you outline how that would that work if you only have that one service with a given bank?
This is quite a common scenario, where a business might have transaction and loan accounts with, say, Westpac, and their payment services with, say ANZ because ANZ were offering the best deal on those services at the time, and moving your payment services is relatively simple (compared to moving all the other stuff).
If you only have one service with them then it's probably not going to help. However like personal banking, where you can normally get a reduced interest fee or cash when you switch your mortgage and bank, combining all your banking needs can give you better discounts as they have you 'locked' in. In which case they're more likely to go we'll provide you payment services at a reduced % if you use us for the rest of your business banking needs.
As it stands there is no incentive for the banks to reduce the payment fees as they can legally just pass the cost onto the retailer. If it became part of the cost of business banking it's far more likely it would be something that could be negotiated.
Successive govts have let the banks off the hook by not enforcing Open Banking and many other improvements. The big 4 used to make the same amount of profit off NZ as their equiv/sister banks in Aus with 5x the population.
The banks have to be legislated for them to do things that are common overseas e.g. latest example was confirmation of payee. It took them to be forced to do it for them to get on and do it. Meanwhile millions of dollars was being scammed out of the public. As it's a massive oligopoly there's no incentive for them to make customer improvements, bring in new payment functions etc. unless it makes them more money.
Go to Phuket and all the locals are using the Line app which allows them to make transfers via a QR code they scan at nearly all businesses. This sort of tech/competition is the only way these fees will get reduced unless it's regulated (which is what the Commerce Commission has now done with interchange fees https://www.rnz.co.nz/news/business/567165/commerce-commissi… ). If the banks really wanted to lower the fees they'd setup a PayWave equivalent via Eftpos or similar. At the moment they're more than happy making extra $$ from consumers.
Hard to legislate your way out of these things. You need real competition to develop or enter the market. How to achieve that? make NZ a market that is worth being in or entering… unforunately, the reverse is happening.
@huffboy: Completely agree. As banking is so locked down with regulations etc. the govt is making it very difficult for new entrants to improve things like payment services and really bring innovation. Open Banking is only a small part of the puzzle.
@mpc: to add… lots of the systems in other countries are not run by banks. they are telcos or tech companies who leverage off alipay+ platform (including line pay you mentioned).
@huffboy: We just got back from a trip to the states, UK and Canada and was surprised how hard all of them push apple and Google pay. Everything everywhere has those payments stamped all over them and you rarely see anything about using cards. Even ordering food in a pub they encourage qr codes and using apple pay on in your phone.
… surprised how hard all of them push apple and Google pay.
Perhaps their merchant fees are lower if you choose to pay via, say, Google Pay than if you use, say, Visa?
Can't Upset the Big Banks, especially when you have less than 5 running the country.
General Population/Retailers can cry a bit and then they will forget and by election time there will be a new gimmick to focus on.Exactly whereas it should be the govt upsetting the banks as they're earning insane profits (even when compared to Aus).
Successive govts have been all about the optics and public opinion. Take power prices where the govt own 50% of most of the gentailers. If they really wanted to reduce prices they'd forgo dividends they get from these companies and power prices could be reduced. Instead they publicly complain about the power companies not investing enough in new generation. The deal they did with the Tiwai smelter saved them $millions, as it meant they kept their inflated dividends.
so are the local banks and kiwibank not charging these CC fees?
@huffboy: I don't do business banking so can't confirm but can probably guess they will be passing on these fees otherwise they take a 1-2% hit. Kiwibank and the local ones lack equity to really go after the big 4 and compete at their level. Hence why Kiwibank have just asked the govt to approve the option of a $500m equity raise so they can lend more money to customers. For every $1 of lending they have to have a % of that in capital so if something goes wrong there's sufficient funds for them not to go bust.
I wonder if we will start seeing Amex-only surcharges after this. I remember seeing a different surcharge for Visa/Mastercard and Amex at AA.
This also comes after Visa called for a ban on surcharges, which although valid, seems to be like shifting the spotlight away from themselves to the government.
You will as only Visa/Mastercard are included and it excludes all online payments, so expect to keep seeing surcharges for these.
Yep - back to the future I guess.
Means that many will do what is rational, and use credit cards with good rewards programmes, charging the merchants more in fees.
If the merchants can't pass on the costs being incurred, they will either raise all prices to compensate, disadvantaging those using debit cards (for example), or might just stop accepting the cards that that charge higher fees (that they can't pass on) if that is viable for them.