Ask LH: Can I Be Charged For Using EFTPOS?

Hi Lifehacker, I was recently charged a $2 fee to use my EFTPOS card to pay for something. This merchant charges a $2 fee for all cards -- even if using your savings account. Is this legal? I have payed fees for credit cards in the past but never for EFTPOS purchases. Thanks, Overcharged

EFTPOS picture from Shutterstock

Dear Overcharged,

Obligatory:

In short, it's entirely legal for merchants to charge EFTPOS transaction fees. While there are restrictive guidelines in place for credit card surcharges, the same rules don't apply to EFTPOS purchases.

As we've noted previously, smaller businesses often carry a heavier burden for accepting electronic payments due to the lower scale they offer banks, which can often lead to higher costs being passed on to customers.

With that said, charging a fee for all EFTPOS purchases is pretty unusual. Usually, the fee only applies to purchases under a specified amount. (You can bone up on the ins-and-outs of EFTPOS transactions here.)

If this particularly irks you, the obvious solution is to take your business elsewhere. Either that, or ensure you always have plenty of pocket shrapnel on hand.

Cheers Lifehacker

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Comments

    I used to install a wide selection of Ingenico devices for a few, but not all, banks. The merchants had usually signed a contract that stated they were not permitted to charge extra, nor have a minimum purchase amount. There were some removal jobs I had where the merchants had broken these conditions and were being relieved of their EFTPOS device. It may be worth researching the bank named on the companys' EFTPOS terminal and see what their policy is on additional merchant charges.

      interesting. i might keep my eye open for shops with charging signs now

    What about with Taxi companies?

    They always charge extra tariff for the use of EFTPOS (read: Not Credit) Cards. No wonder people are moving to UBER!

      I was watching 'The Checkout' (on ABC - a great show that I would recommend to anyone) and they were suggesting that in taxis, it is basically because cabcharge sets the rules because they have a stranglehold on the industry, and cabcharge fucks everyone. Everyone.
      You can watch the segment on the show's clips page. Just scroll down to 'All Hail Taxis'.

      Last edited 15/01/15 4:08 pm

    *paid

    Christ, do you have proof readers?

      This spelling error was in the reader's original email. We usually correct these mistakes but occasionally one slips through.

      His name is Chris, maybe you should take some of your own advice /s

    Last night I went to purchase all my PC components from PC Case Gear. Then comes the almighty 2% surcharge, which irked me so I left the store. Pieced together my machine at several other stores, and they were going to charge the same or more for the PC+ shipping as PCCG would for PC+shipping+surcharge, or I would of had to piece it together from several stores, so shipping fee's would of killed my savings, and any warranty/return would be more of a headache.

    Figured they charge the surcharge because they offer such good prices and have razor thin profit margins, went back and ordered from PCCG.

    What really irritates me is $10 minimum, if I wasn't already planning on spending over $10, I'll just leave and buy your product from the next store who wants my money. Especially something like a food/ beverage place, I'm not going to buy two muffins or two juices to make up $10.

    Last edited 15/01/15 4:52 pm

    Surcharge is for using your CC (Not your savings account) though. This isn't too out there.

    @dknigs This is known as drip pricing (where they add surcharges etc. at the end of your transaction). Airlines are notorious for doing this - there is action in the courts and possible legislation coming that will make this illegal, and force retailers to disclose all of the costs up front.

    Retailers are, at the moment, allowed to charge basically whatever they want in terms of card surcharges. The RBA has issued guidelines stating that the cost charged to the consumer for accepting card payments should only reflect the cost of acceptance, but have given authority for enforcing it to the card schemes (AMEX, MasterCard, Visa and EFTPOS), who don't have any legal authority to issue fines etc. for infringement. There is talk of this being changed as part of the Murray Financial Services Inquiry, but time will tell if this actually happens or not.

    For retailers, the cost depends on what kind of interchange is being charged, which is determined by what type of card you have. All American Express cards are outside the interchange laws, and so cost more for retailers to accept (which is why you often see '3% surcharge on AMEX' signs). Super-premium cards, like CBA Diamond, also have higher interchange rates, and so cost more to accept, while basic cards have very low interchange rates (something like 0.3% if memory serves). EFTPOS is different - rather than charging a percentage, they charge a flat rate (which I think is around 15c per transaction), so generally cost less for retailers to accept than Visa or MasterCard payments.

    CabCharge and Airline card surcharges are a joke. The highest level of interchange doesn't go about 3%, so even if you factor in the cost of the card terminal, anything over 5% is just blatant price gouging.

    Last edited 16/01/15 10:47 am

      The scenario described in this article is not drip pricing. Drip pricing is where the added charge is not disclosed until after the transaction is nearly completed. In this case, the consumer was made aware of the $2 surcharge before the transaction began. That is entirely legal.
      My card services provider charges me 2.95% plus 30 cents per transaction, because I am a low volume merchant. I am not able to absorb that cost, and nor should I have to.

        Card service fees are part of the cost of sales - all the costs to deliver the goods to the customer. These costs should ALL be built into the price, just as purchase costs, labour, rent, rates, utilities, transport, etc are included. Why single out card services? Why not charge more for, say, air conditioning in the summer, or heating in the winter?

        Most customers find it irritating to be charged extra to pay electronically. It is bad customer service and probably costs you more in the long run from lost business due to customers not returning (see some of the comments above to prove how businesses lose custom by charging extra).

        Nobody is expecting you to absorb the cost, it should be built into your pricing along with all of your other costs.

          I am happy to agree that the list of costs you give should all be factored into the cost of sales. However, I strongly disagree that c/c fees should be included in that list. Merchant fees are an optional additional expense to the transaction. If a client wants something delivered urgently by express post, should that also be built into the price? Of course not! It is an optional extra.
          As an entertainer, my credit card merchant fees can sometimes be more than $100 for a single transaction. If they pay me by any other method there is no fee whatsoever. Why should I absorb that cost? And more importantly, why should the vast majority of my clients have to subsidise the small percentage who choose to pay via credit or debit card?
          I can honestly say that I have never lost a client due to a credit card surcharge. Everybody has been happy to either pay the surcharge, or use a different payment method.
          In fact, everybody understands, and is supportive, when I explain that the surcharge is exactly what my service provider charges me. I don't load up the fee like JetStar does.
          BTW, I don't load up express post charges either. I invoice it at the exact same price that the Post Office bills me.
          My clients understand that, and they appreciate that. Therefore, I will continue to keep doing it this way, unless the government makes it illegal.

            The problem we have at work is when we sell iPhones etc at a low margin, If you make $30 on a $1000 sale - there goes you entire profit in merchant fees. This is our worst case scenario but still makes it tough. This is the reason we haven't transitioned to paywave yet - the merchant fees are astronomically higher than the deal we have currently.

            Doesn't handling cash have an inherent cost as well? I imagine there would be costs associated with transporting cash to the bank for deposit (services such as Armaguard or an employees time to take the cash to the bank, etc), not to mention the risks associated with handling and transporting cash such as extra security. As there are no surcharges for cash transactions at most businesses, these costs are already built into the price. Electronic transactions such as EFTPOS and credit/debit cards avoid these costs, so the retailer is only really justified in passing on the extra additional cost to the consumer rather than the full cost of the service.

            So in a hypothetical scenario if a customer uses an electronic payment method with say a 1% merchant fee, and the cost of handling cash is say 0.5%, then the net cost to the business is 0.5%. The surcharge should really only be the net cost of 0.5%. Anything else is price gouging.

            Last edited 28/01/15 12:04 pm

              I like your logic, kesawi, and that may well apply to the big end of town. I am not qualified to comment on that. However, it does not reflect my situation at all.
              My preferred payment option is direct deposit to my bank account, for which there are absolutely no transaction fees, or handling expenses. I rarely accumulate enough cash in my business to warrant a trip to the bank. Nearly all of my cash income is consumed in petty cash transactions and expenses. If I do need to go the the bank to deposit cash I will use the bank's ATM which is available 24 / 7, and I will do it when I am going past anyway. I would never make a special trip. So essentially, there are zero costs or transaction fees for me to take cash payments.
              My real life scenario is very different to the hypothetical one that you are proposing. I am not talking about .5% fees. I am talking about merchant transaction fees of $100 or more in some instances. That is real money that I need in my pocket so that my business remains viable, and to ensure that my family unit remains intact!
              Well, is that price gouging? HELL YEAH! But the banks are the perpetrators, not the merchant! All anger should be directed at them, not a struggling entertainer trying to eek out a living in a challenging economy.

              Last edited 28/01/15 2:12 pm

                Thanks @dave_lord for providing an insight into your situation. It does seem that the merchant fees charged by the banks are structured to favour high volume transactors like the big retailers who can negotiate a discount due to the sheer number of transactions they do on a daily basis. I can appreciate why smaller merchants like yourself need to pass on these costs as they are a significant impost on your income.

                It will be interesting to see how alternative payment methods which require no intermediary to effect the transaction, such as bitcoin, impact the landscape and how the established players react to retain their share of each transaction processed.

        Mate, you are getting shafted. Small merchants get absolutely reamed by MS fees. Have you considered PayPal? They charge a flat 1.95% per transaction, with no monthly fees and upfront of only $139 for the reader. There are also a number of other acceptance companies aimed at small business that will undercut most Aussie banks.

        Also, I may have misread his comment, but he said 'and then came the 2% surcharge', which I took to mean at the end of the transaction. I would be interested to hear if this was the case, as I thought it was pretty much isolated to airlines at the moment.

    Edit: This was the reply to WillD above.

    Last edited 18/01/15 2:08 pm

    I live on a remote pearl farm which has a restaurant with bar and takeaway foods. If paying by eftpos we get charges an extra $2.50 fee on top of purchases - this is not advertised but just add onto the total of the eftpos payment, is also not On the invoice. Also they do not let us get cash out so as we can pay with cash to avoid the $2.50 eftpos fee. As many of us do not go to town regularly and there are no atm facilities within 189km it seems pretty unreasonable and just a scam to get more money off customers. Surely this cannot be right - no cash facilities in nearest 189km, and they do net let cash out with purchases?? Either not right or just another company scam, but not sure

    My husband purchased $10 petrol this morning and was charged $5.20 cashout a total of $15.20 via eftpos. He is now returning to query with garage as it seems abit steep and he's been buying petrol there for years and never noticed until today! Unfortunately it's the only garage on the island where we live (off mainland Brisbane) so we have no choice to purchase there, but in future will be paying cash.

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