Differential surcharge for premium cards!

[Duffa]

Just been to a kitchen warehouse today.
Went to pay $50 for a small item on my Citi Select and the NAB terminal popped out a warning that there was a $0.85 charge with that card.
I pulled out my Emirates Plat and the same thing - $0.85 premium! That's a 1.7% surcharge, for the non mathematically inclined - (apologies for stating the obvious Stephen65 !!)
I don't have any other cards (other than AMEX and I didn't even bother) so I asked the business owner what the deal was.

He recently changed to NAB because they only charge him 0.59% transaction fee (his previous merchant charged 1.29% from memory).
He told me that "ordinary" cards don't pop up the surcharge and that he doesn't get the 85 cents but that the bank does.

If this gains traction then my newly acquired Citi Select won't be worth the $700 fee

$100,000 spend
$1,700 surcharge + $700 fee = $2,400

100,000 points - surrender value - $769 Myer vouchers
100,000 points - surrender value - $937 Qantas Y class MEL - LHR rtn

I don't think so !!!

 

[Mal]

Has been pretty rare to see it implemented, but is starting to get traction. I think the software in Eftpos machines is getting smarter and can automatically add surcharges that are preset. Certainly i've seen machines that automatically add 3% as a "surcharge" on the actual credit card slip.

 

[oz_mark]

I actually think this is the way things will be going, especially if moves to restrict fees to no more than the actual charge come to pass.

 

[one9]

Just been to a kitchen warehouse today.
Went to pay $50 for a small item on my Citi Select and the NAB terminal popped out a warning that there was a $0.85 charge with that card.
I pulled out my Emirates Plat and the same thing - $0.85 premium! That's a 1.7% surcharge, for the non mathematically inclined - (apologies for stating the obvious Stephen65 !!)
I don't have any other cards (other than AMEX and I didn't even bother) so I asked the business owner what the deal was.

He recently changed to NAB because they only charge him 0.59% transaction fee (his previous merchant charged 1.29% from memory).
He told me that "ordinary" cards don't pop up the surcharge and that he doesn't get the 85 cents but that the bank does.

If this gains traction then my newly acquired Citi Select won't be worth the $700 fee

$100,000 spend
$1,700 surcharge + $700 fee = $2,400

100,000 points - surrender value - $769 Myer vouchers
100,000 points - surrender value - $937 Qantas Y class MEL - LHR rtn

I don't think so !!!

Its good to see NAB has finally implemented this. I remember many years ago when NAB implemented Differential surcharges they said in their merchant newsletter that they planned to implement this in their terminals. It has taken then many years to get it done. My business has already changed banks.

Of course as a shopper, I don't like this.

But as a merchant I can understand and think its reasonable. Normal cards cost about 0.6% to process. Premium cards cost maybe 1.5% and Business cards maybe 2%. There is a huge difference and if this cost can be passed on, it allows merchants to offer lower prices to standard card, eftpos & cash users.

 

[awilcockson]

But as a merchant I can understand and think its reasonable. Normal cards cost about 0.6% to process. Premium cards cost maybe 1.5% and Business cards maybe 2%. There is a huge difference and if this cost can be passed on, it allows merchants to offer lower prices to standard card, eftpos & cash users.

And what would it cost you if everyone suddenly started paying in cash?

Uh oh, can open, worms everywhere.

 

[ronicat]

I came across this at a roadhouse just north of Perth this week where the eftpos machine automatically added the surcharge, but worse was to come. When I went to sign (insisted on signature even after entering the pin for MasterCard - no chance with Amex) there was a spot to add how much I wished to include as a tip in addition to the surcharge!

 

[Moopere]

One can only hope that there is sufficient competition in the market to prevent widespread uptake. But all it would take is a bit of solidarity between the banks and you'd instantly get it everywhere, like the 1.5% on hotels for CC bookings which is now nicely rolled out to almost all the chains and independents alike.

I guess ultimately not a lot will change for those who care about such things. CC divisions of banks will still be fighting one another for market share and some form of inducement will still have to be found, perhaps 12 months from now we'll all be trading our Gold and Platinum cards for standard cards which just happen to still earn 1-2points / $

For those who don't notice or just don't care, they will pay the new fee oblivious, much as people now do for EFTPOS transactions that were free once upon a time.

With some of the newest CC offerings coming up with really measly MC/VISA earn rates of 0.5 or even 0.25 points / $ spent, perhaps we'll end up with AMEX as the only champion of high earning and they will be coveted and used by certain clients and merchants to those clients will understand this and absorb the cost, much as they do now, but a gap (gulf?) will be forced into the market making much more plain the cost/value/luxury components of retail.

 

[Moopere]

And what would it cost you if everyone suddenly started paying in cash?

Uh oh, can open, worms everywhere.

There is a good thread elsewhere thats only recently gone cold on this subject.

I suspect thinking folks will continue to do what they do now ... go for the cheapest option. I know I certainly do that, its just that I factor in the value of points earned so its not a straight dollar value proposition. If using cash suddenly becomes measurably cheaper for many people then thats probably what will start to come back into fashion. Of course emphasis on _measurable_ as there is a strong convenience factor at work in the value judgement.

 

[oz_mark]

I came across this at a roadhouse just north of Perth this week where the eftpos machine automatically added the surcharge, but worse was to come. When I went to sign (insisted on signature even after entering the pin for MasterCard - no chance with Amex) there was a spot to add how much I wished to include as a tip in addition to the surcharge!

I hate that. Any place that surcharges automatically puts itself on my no-tip list.

 

[ric_melb]

A place that surcharges automatically is one that wont get my business.

 

[awilcockson]

A place that surcharges automatically is one that wont get my business.

Amen to that.

 

[cove]

We declined Westpac's offer to have our business pay more on Visa and MasterCard "premium business cards" as it is another Big4 Bank get rich scheme for them at your expense.
The Bank then is at risk of losing your whole account if they persist so they should back off if your account manager wants to keep you.

 

[markis10]

We declined Westpac's offer to have our business pay more on Visa and MasterCard "premium business cards" as it is another Big4 Bank get rich scheme for them at your expense.
The Bank then is at risk of losing your whole account if they persist so they should back off if your account manager wants to keep you.

While everyone does seem to be blaming the banks, it should be pointed out that the premium cards have had a different rate for some time as charged by the card scheme owners, glad I dont have a super premium card LOL:

MasterCard Credit Card Transactions
[TABLE="class: dataTB"]
[TR]
Interchange Category Name Priority Interchange Fee
inc GST [/TR]
[TR]
[TD]Charities[/TD]
[TD]1[/TD]
[TD]0.000%[/TD]
[/TR]
[TR="class: altRow"]
[TD]Strategic Merchants 1[/TD]
[TD]2[/TD]
[TD]0.275%[/TD]
[/TR]
[TR]
[TD]Strategic Merchants 2[/TD]
[TD]3[/TD]
[TD]0.374%[/TD]
[/TR]
[TR="class: altRow"]
[TD]Government & Utilities[/TD]
[TD]4[/TD]
[TD]0.330%[/TD]
[/TR]
[TR]
[TD]Petroleum[/TD]
[TD]4[/TD]
[TD]0.374%[/TD]
[/TR]
[TR="class: altRow"]
[TD]Education and Learning[/TD]
[TD]4[/TD]
[TD]0.330%[/TD]
[/TR]
[TR]
[TD]Recurring Payments[/TD]
[TD]5[/TD]
[TD]0.330%[/TD]
[/TR]
[TR="class: altRow"]
[TD]PayPass[/TD]
[TD]5[/TD]
[TD]0.385%[/TD]
[/TR]
[TR]
[TD]Quick Payment Service[/TD]
[TD]6[/TD]
[TD]0.440%[/TD]
[/TR]
[TR="class: altRow"]
[TD]SecureCode Merchant UCAF Super Premium[/TD]
[TD]6[/TD]
[TD]1.650%[/TD]
[/TR]
[TR]
[TD]SecureCode Merchant UCAF Premium[/TD]
[TD]6[/TD]
[TD]0.990%[/TD]
[/TR]
[TR="class: altRow"]
[TD]SecureCode Merchant UCAF Commercial[/TD]
[TD]6[/TD]
[TD]1.397%[/TD]
[/TR]
[TR]
[TD]SecureCode Merchant UCAF Standard[/TD]
[TD]6[/TD]
[TD]0.330%[/TD]
[/TR]
[TR="class: altRow"]
[TD]SecureCode Full UCAF Super Premium[/TD]
[TD]7[/TD]
[TD]1.705%[/TD]
[/TR]
[TR]
[TD]SecureCode Full UCAF Premium[/TD]
[TD]7[/TD]
[TD]1.045%[/TD]
[/TR]
[TR="class: altRow"]
[TD]SecureCode Full UCAF Commercial[/TD]
[TD]7[/TD]
[TD]1.397%[/TD]
[/TR]
[TR]
[TD]SecureCode Full UCAF Standard[/TD]
[TD]7[/TD]
[TD]0.385%[/TD]
[/TR]
[TR="class: altRow"]
[TD]EMV Premium[/TD]
[TD]7[/TD]
[TD]1.100%[/TD]
[/TR]
[TR]
[TD]EMV Commercial[/TD]
[TD]7[/TD]
[TD]1.397%[/TD]
[/TR]
[TR="class: altRow"]
[TD]EMV Consumer Electronic[/TD]
[TD]7[/TD]
[TD]0.385%[/TD]
[/TR]
[TR]
[TD]Super Premium[/TD]
[TD]8[/TD]
[TD]1.760%[/TD]
[/TR]
[TR="class: altRow"]
[TD]Commercial[/TD]
[TD]8[/TD]
[TD]1.397%[/TD]
[/TR]
[TR]
[TD]Consumer Premium[/TD]
[TD]9[/TD]
[TD]1.100%[/TD]
[/TR]
[TR="class: altRow"]
[TD]Consumer Electronic[/TD]
[TD]9[/TD]
[TD]0.385%[/TD]
[/TR]
[TR]
[TD]Consumer Standard[/TD]
[TD]10[/TD]
[TD]0.440%[/TD]
[/TR]
[/TABLE]


[h=5]Domestic Visa Credit Interchange Rates[/h] Effective 30 June 2010, the following interchange rates apply to domestic transactions processed through Visa’s National Net Settlement Service:

[TABLE="width: 100%"]
[TR]
[TD="class: links, bgcolor: #c0c0c0"] Description[/TD]
[TD="class: links, bgcolor: #c0c0c0"] Rate inclusive of GST*[/TD]
[/TR]
[TR]
[TD] Charity rate[/TD]
[TD="class: links"] 0%[/TD]
[/TR]
[TR]
[TD] Large Ticket rate (exclude T&E)[/TD]
[TD="class: links"] A$22 + 0.22%[/TD]
[/TR]
[TR]
[TD] Strategic Merchant Program rate[/TD]
[TD="class: links"] 0.275% - 0.385%[/TD]
[/TR]
[TR]
[TD="class: links, bgcolor: #ffffff"] Government rate[/TD]
[TD="class: links, bgcolor: #ffffff"] 0.33%[/TD]
[/TR]
[TR]
[TD] Transit rate[/TD]
[TD="class: links"] 0.33%[/TD]
[/TR]
[TR]
[TD] Utility rate[/TD]
[TD="class: links"] 0.33%[/TD]
[/TR]
[TR]
[TD] Recurring Payment Transaction rate[/TD]
[TD="class: links"]0.33%[/TD]
[/TR]
[TR]
[TD] Service Station rate[/TD]
[TD="class: links"] 0.352%[/TD]
[/TR]
[TR]
[TD] Supermarket rate[/TD]
[TD="class: links"] 0.352%[/TD]
[/TR]
[TR]
[TD] Education rate[/TD]
[TD="class: links"] 0.44%[/TD]
[/TR]
[TR]
[TD="class: links, bgcolor: #ffffff"] Insurance rate[/TD]
[TD="class: links, bgcolor: #ffffff"] 0.44%[/TD]
[/TR]
[TR]
[TD="class: links, bgcolor: #ffffff"] Electronic rate[/TD]
[TD="class: links, bgcolor: #ffffff"] 0.44%[/TD]
[/TR]
[TR]
[TD] Standard, Card Not Present and Paper rate[/TD]
[TD="class: links"] 0.495%[/TD]
[/TR]
[TR]
[TD="class: links, bgcolor: #ffffff"] Platinum rate[/TD]
[TD="class: links, bgcolor: #ffffff"] 1.10%[/TD]
[/TR]
[TR]
[TD] Super Premium rate[/TD]
[TD="class: links"] 1.87%
[/TD]
[/TR]
[TR]
[TD="class: links, bgcolor: #ffffff"] Commercial rate[/TD]
[TD="class: links, bgcolor: #ffffff"] 1.408%[/TD]
[/TR]
[/TABLE]
* All fees are represented in Australian Dollars

 

[cove]

Did you see MasterCards profit jumped.
Well we can jump too.........by saying no thank you!
Bloomberg reported on MasterCard last night.

 

[medhead]

But as a merchant I can understand and think its reasonable. Normal cards cost about 0.6% to process. Premium cards cost maybe 1.5% and Business cards maybe 2%. There is a huge difference and if this cost can be passed on, it allows merchants to offer lower prices to standard card, eftpos & cash users.

I don't understand this, keep in mind I'm not a merchant just a spender. But as I read the OP they don't see the extra surcharge at all. So it's not clear to me how the merchant can lower the cost for standard cards. I also thought that the bank was supposed to charge the merchant and the merchant then had a choice to pass on the charge to a customer. What if the merchant doesn't want to surcharge at all? Isn't NAB overriding that choice?


Sent from my iPhone using Aust Freq Fly app so please excuse the lack of links.

 

[Mal]

I don't understand this, keep in mind I'm not a merchant just a spender. But as I read the OP they don't see the extra surcharge at all. So it's not clear to me how the merchant can lower the cost for standard cards. I also thought that the bank was supposed to charge the merchant and the merchant then had a choice to pass on the charge to a customer. What if the merchant doesn't want to surcharge at all? Isn't NAB overriding that choice?

I suspect that the CC machines are programmable by either the bank or the merchant. If the machine recognises various cards (I assume it has a list of the various xx_xx_ numbers and knows what they are used for) then it can charge whatever is preset for that type of card.

I've been to many vendors that have NAB terminals and don't surcharge. I suppose it depends on what the machine is preset with.

I can see how it's beneficial to merchants. No more worrying about "John or Jane" cashier forgetting to add the 3% AMEX surcharge, no issues with identifying (or trying to identify) what type of card is being presented etc etc etc.

BUT - Many card providers charge a blended fee - not a fee based on card presented. (This may change based on RBA action)... so it's moot for most other credit providers apart from NAB.

 

[ozmille]

Just had a look at my WW EDR MC and it has a tiny statement on it that it is a PLATINUM card, if they start surcharging for this one as well it looses a bit of it's appeal.

 

[Duffa]

Just been in to a BP using my Amex.
No surcharge but it was an older type NAB terminal. Maybe they don't have the software to work out a premium card or the merchant has simply opted to spread the transaction cost across all the cards he/she accepts.

 

[doctork]

Regarding markis10's very useful info on the charges by the card system people above:

The Australian Tax Office is presumably Government, at 0.33%.
ATO claims their fee of 0.48% is purely their bank charges.
That would mean their bank is charging them 0.15% on top of MasterCard to run their CC payment system.
Does the ATO bank with the Reserve Bank of Australia?

No that this post has a particular opinion, it's just interesting to see where the money goes.

 

[jamesatfish]

It's interesting that across different banks (and even across different merchant agreements within the same bank) there are differing approaches to 'premium cards'.

My merchant facilities are with Westpac, and we pay a flat rate for all Visa or Mastercard payments, regardless of the colour of the card. At our last rate negotiation my bank manager did mention that the practice of differential surcharges was becoming more common, predominately due to the increasing capabilities of the EFTPOS machines, but I would rather a flat rate across all cards than a differential rate which varies wildly depending on which card is wielded by the customer.

As a merchant I've been semi-seriously toying with the idea of implementing a surcharge for cash and cheque payments. I hate the outdated 'deposit slip in triplicate' process of banking cheques and hate the risk of staff carrying around thousands of dollars of cash which I then need to cart down to the bank.