Australian consumers are being charged surcharge fees like no other country in the world and while the Reserve Bank has insisted that retailers and other price setters show the added expense of buying online using cards, it’s highly likely we don’t know how big the slug adds up to be!
We Aussies are famous for being record-breakers but the Daily Telegraph has revealed that this is a milestone we shouldn’t be bragging about. “All up, the price of leading the world in making electronic transactions can be revealed to have risen by $400 million last year to a whopping $4 billion, according to analysis by comparison service Canstar,” the Tele’s John Rolfe has reported. “The bulk of that bill is hidden in sticker prices, which retailers have secretly increased to recover their growing cost of acceptance. But more and more merchants – especially cafes and restaurants – are choosing to put a fee on top.”
And Rolfe reveals that it’s in hospitality that many of us get slugged. “The proportion of food and drink businesses applying surcharges rose from 42 per cent to 47 per cent in the six months to January, new data from payment terminal provider Tyro shows,” he said.
MD of Payment Services Brad Kelly calculates that the surcharge slug on consumers is rising by 10-15% a year. This growth isn’t simply because retailers are adding more fees but because we’re committing to more online purchases, which has surged since Covid.
Retailers are banned from profiting from surcharges that came about because the RBA wanted consumers to see what they were being charged but merchants can hit a consumer for the cost of the convenience of being able to buy online or tap and go. “According to the Reserve Bank of Australia, consumers made about 650 electronic transactions per person in 2021-22 – more than any comparable nation – and up from 300 a decade earlier,” Rolfe tells us.
In simple terms, many of the fees are for the convenience of online buying. These can bring acceptance fees and I bet few of us see, though they would be there, however, some retailers and service providers are adding on some which is called gouging.
And every time you use those nice little white square tapping machines with your credit or debit card, the payments provider (US-owned Square that bought Afterpay) slugs the consumer big time. “One of the most expensive payment service providers is Square, run by Twitter founder Jack Dorsey,” Rolfe explains. “When a customer pays for a purchase via a Square terminal, and the retailer has chosen to surcharge, 1.6 to 1.9 per cent is added, regardless of the type of card or whether it is a tap transaction.”
Square’s income rose 62% last year to $288 million!
Kelly said that none of this is illegal but it’s not what the RBA wanted, and it doesn’t happen in the European Union or the UK.
Swinburne academic Professor Steve Worthington told the Tele that surcharging is “becoming more and more common” but many retailers were failing in their duty to warn customers beforehand. “We often don’t know when we are paying that we are being surcharged,” Prof Worthington said, even though by law we should be warned. He speculated that Australians may soon begin withdrawing more cash from ATMs to avoid the surcharge scourge.
Consumers are in the dark and Rolfe points out that the fees on a debit card and a credit card for the same purchase can vary be 0.33% for the former and 1.29% for the latter.
Experts say this whole system of surcharges is complicated and expensive for small retailers, 22so they take the easy way out and rely on Square to make sure what they do is legal but not costing them to make a sale online or in a ‘tap and go’ situation.
But the Square method is more expensive for the consumer. It looks like it’s a job for the Australian Competition and Consumer Commission (ACCC) to make it clearer to consumers what they’re paying for when they use their cards for buying ‘stuff’.
The ACCC should also get involved in how streaming services and other online contracts linked to forgotten passwords are draining us of money on a monthly basis, and credit card companies won’t simply stop making payments when you ask them to stop!
Bill Maher, US comedian and host of a terrific HBO tonight show that I watch on Foxtel, recently reported that some US government agency was monitoring Americans’ phone calls and even their TV-watching habits! Maher said if they’re going to do that, could they at least let him know what streaming services he’s paying for?
This is just another big issue that a public body, which is funded to help us, is doing sweet FA to help us as the cost of living is breaking too many Australians.
Could this be a job for PM Albo’s team to fix? I say, yep!