Penalised for paying with plastic. Is it fair?

Vanessa Croll
July 26, 2016
Herald Sun
No one likes getting ripped off. Maybe because money doesn’t tend to come easy… and is usually gone quicker than you can say “oh bugger, the petrol tank’s empty”.
You can be paid by the hour and spend it all in seconds just keeping up with the cost of living.
This constant game of catch and kiss — and wave goodbye — with your bank balance is something of a cruel tease. No wonder parting with pay can at times evoke an emotional response, especially if there’s even a whiff of exploitation.
Recently moving from Brisbane to Sydney, I’ve noticed a trend that’s gradually evoked my own emotional response — I’ve gauged it to be somewhere between perturbed an angry.
It’s to do with eftpos surcharges. Fifty cents extra for a coffee here, $1 extra for lunch there, another $1 extra for some groceries on the way home from work and the minute extra charges add up.
And then there’s the minimum spend. The other day I paid for lunch. The cost was over the minimum spend of $10. While waiting for it to be cooked, I decided to buy a $2 drink.
“That will be an extra 50 cents” I was told by the staff member as she pointed to the surcharge sign.
“Hold on, I just spent the minimum spend of $14 five minutes ago. You took my order.”
It didn’t matter. It didn’t matter I was a regular customer. Choose to pay plastic and you will be penalised. Yes, I could be more proactive and withdraw cash when I do my grocery shopping — so as to not incur an extra $2.50 fee to use an ATM that’s not my bank’s because I’m nowhere near one — but considering that’s a rare occurrence, it just doesn’t happen. Card is more convenient.
Someone obviously took their surcharge frustrations out on this innocent ATM. Violence is not the answer, people. (Pic: Bill Hearne)
Ignoring the accumulating irritation, I usually pay with a smile, rationalising that small businesses do it tough and they must have a reason. But this doesn’t explain the diversity in charges, nor the abundance of card charges in one state compared to another.
In an effort to understand if these feelings are warranted, I called on an expert.
Professor at Swinburne University of Technology’s Business School, Steve Worthington, recently wrote an article titled, Charging for credit and debit card use may become the norm. He tells RendezView that consumers do have cause to be wary of these fees.
“These types of extra fees came into effect in 2003, when the Reserve Bank of Australia allowed merchants to use a surcharge,” he says. “Previously they would have included their fee in their normal pricing.”
Meaning many small business owners were already covering merchant service fees — their banks’ fees for processing debit purchase transactions — by increasing the price of their goods.
“In my opinion,” Worthington says, “a number of organisations chose to impose a surcharge where previously they included the cost in the price of their goods.
“Sensible merchants like to receive payments in cash… I’ll leave it to you to imagine why… Other merchants think, well we have to pay so we’ll do the best we can. Some merchants do a different surcharge depending on whether it is a debit or credit card you pay with.”
Adding that “there’s no legal difference between states. It’s a federal decision to allow surcharging”.
In February, the Australian Competition and Consumer Commission was given power to issue listed corporations who change their customers excess card surcharges infringement notices of just over $100,000.
From September, the ACCC will begin enforcing a ban on excessive surcharges for large business — having gross revenue of more than $25 million, the value of its assets is more than $12.5 million, or it employs more than 50 people. And from September 2017, this ban will go on to apply to small businesses.
As a guide for consumers, the RBA has defined a reasonable surcharge as around half a per cent of cost of purchase to process payments from debit cards and one to one-and-a-half per cent for credit cards.
When this ban comes into place, Worthington explains “the banks will have to report regularly to each merchant. The merchant will then decide what to charge and we as consumers will have to decide whether we can swallow that or to walk away”.