Differential surcharge for premium cards!

[AdMEL]

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 I hate the outdated 'deposit slip in triplicate' process of banking cheques and hate the risk of staff carrying around thousands of dollars of cash which I then need to cart down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.

My understanding is that Westpac does not have the capability at this point in time to charge different rates for different cards, other than corporate cards. This may be an EFTPoS terminal constraint, or a system constraint.

 

[cove]

As a wholesaler we don't take cash.
Our Credit card machine is one rate of 0.77% including the 10% GST seeing we said no deal to the alternative of variable rates for different cards as that was going to cost us.
We use a delivery service to handle our banking so staff can do their work rather than be messengers and we wouldn't go back to doing it ourselves.
I think we pay $4.50 a day.

 

[NM]

This has been coming for a while now. Why do you think card providers have been pushing people to "upgrade" to premium cards for the last few years? Its because the card provider can earn more per transaction with differential surcharging.

Remember it was not very long ago when one of the FF favourite "Annual-fee-free" Gold Card holders were all offered an "upgrade" to a Platinum card. The sceptic in me back then knew the underlying reason was differential surcharing and not the "bank" being nice to their customers.

 

[Moopere]

I always figured the rise in "premium' cards was just a marketing thing. I didn't think there would be substantial differences in back-end charging ... so I've learned something here.

As we move from Platinum into so-called Diamond cards now, I assumed this was a logical ramping up of premium(ness) which is really marketing based. The same basic retail market forces are at work though, so one does wonder if this trend will, in the end, amount to anything. Providers looking for customers, merchants likewise doing battle with one another for your CC spend.

I remember a similar conversation and thought back when EFTPOS systems started to charge customers per retail transaction when up till then it was free, or further back when banks started charging for 'transactions' as opposed to essentially free banking for retail customers. People who cared moved into different systems, credit cards for the most part, as they didn't charge the EFTPOS fee and also reduced bank transaction fees for handling cash.

As I say though, retail itself hasn't fundamentally changed, so I suspect differently named opportunities will rise up as the battle for customers continues.