Why Does Credit Cost More?

“I paid with my card, why did it cost me more?” This question is getting pretty common – and it’s no longer a simple one to answer, unfortunately.

Items or services sold cover the costs of running a business. It’s how business works. Historically, no matter how you paid, the price was the same. That’s changing.
It’s becoming more and more common here in New Zealand for merchants (that’s the place you’re shopping at) to pass on certain costs to customers, usually in the form of a surcharge.

So the question remains: why? Why does this surcharge only apply if using credit or contactless payment methods (PayWave etc)?
To answer that, we have to look at Visa and Mastercard. They provide the vast majority of ‘credit’ services for banks around the world – and there’s a cost associated with that. Any card that just has swipe (pure, simple old EFTPOS) isn’t backed by these two companies. Ones with chips on them, ones with contactless chips… Debit and Credit cards, however – those are backed by Visa or Mastercard. And these companies charge a fee for the privilege of accepting their cards.

That’s right. A fee just to be able to have a customer use one of those cards in the store (or on the website). Unlike EFTPOS, where the payment provider (Worldline, Eftpos NZ, Windcave etc) charges a flat fee every month, these two companies charge a percentage of every single transaction. And the percentage varies merchant to merchant, based on how often people use the facility in their shop. Oh, and this percentage is on top of the monthly fee they already pay. Dumber still is the fact with a Debit card the fee is only incurred if you use tap-n-go – if the card is inserted into the machine instead of using contactless, it’s just an eftpos transaction (instead of ‘credit’).

So, for the merchant, a sale normally covers item cost, staff labour, running costs, and payment platform (monthly merchant fees). When it incurs the ‘credit fee’, however, there’s a few percent of the transaction amount taken by Mastercard or Visa. An item that normally has $25 profit might suddenly have $20 instead, just because the customer used a card that has that fee. The merchant doesn’t think it’s fair to raise the price for everyone, and make people who don’t incur the extra cost subsidise the ones that do – so they turn on surcharging, and pass that extra cost on to only the customers who incur it.

Is it an elegant solution? No. Not by a long shot.
Is it the fairest one? Yes. Or, at least, the fairest one that’s been come up with so far.

So next time you see a prompt that says “Do you accept a surcharge of $x.xx for this transaction?”, spare a thought for the merchant who has to decide which course of action they want to take regarding that cost increase. Guaranteed it was not an easy decision.

Beware of EFTPOS Scamming – get integrated EFTPOS!

Don’t get Scammed! Only 13 days ago, on 4 January, a Gold Coast Shop owner was scammed out of $2500. ‘But How?’ I hear you ask.

The two customers finished their meal at the establishment and approached the counter, the shop assistant presented the eftpos machine to them after entering $25. The men then quickly canceled the amount and entered $2500 and used their stolen credit card.

Once the amount had cleared, the two men ‘raised the alarm’ and the money was refunded into their account instead (as they used their credit card instead). They then withdrew the money as quickly as they could from a nearby ATM.

With EFTPOS integration this wouldn’t have happened as the shop assistant would see on the Point of Sale screen what the assailants were doing.



Woman Using iPhone for Apple Pay New Zealand

Why New Zealand Doesn’t Care About Apple Pay … Yet | POSCOM

New Zealand Doesn’t Care About Apple Pay … Yet

These days, we can do everything with our smartphones. We can check the weather, see what traffic is like at 7am, search for products we want to buy online, and take great quality photos. And now, thanks to advancements in technology, our smartphones can also be mobile wallets.

Mobile payment is an amazing global phenomenon. When we physically shop in places that offer contactless payments (payWave), it eliminates the need for bringing wallets and pulling out cards. To pay with your phone, you simply tap it close to an EFTPOS terminal, as you normally would with a payWave card, and voila – payment made! It’s as easy as that. Not having to carry cards around also increases payment securities, no need to worry about losing your card or having your numbers exposed for the world to see – your smartphone takes care of all of that.

Despite this dream of a wallet-free life in New Zealand being so close, we are still very far from achieving it. Even Apple, one of the biggest smartphone brands in the country, still hasn’t quite taken off the ground as much as it already should have in terms of mobile payments. Similar to other providers, its mobile payment solution Apple Pay lets you enter your card details in, turning iPhones magically into mobile wallets. However, despite having such a convenient technology available at the fingertips of Apple users nationwide, New Zealand just doesn’t care about Apple Pay … yet.

Here are the reasons why NZ isn’t using Apple Pay:

Apple Pay Banks are Limited

Shockingly, there are only two banks in New Zealand that support Apple Pay: ANZ and BNZ. ANZ was at the forefront of the Apple Pay roll-out in 2016, making it available to customers with Visa credit or debit cards issued by the bank. For a year, ANZ was the only bank that offered Apple Pay, until BNZ followed suit very recently in October this year to reinforce its initial service Android Pay. ASB and Westpac also have their own mobile payment apps for smartphones, not wanting to rely on the big brands to provide the same service.

With such a limited number of banks (only two!) supporting Apple Pay, it’s no surprise NZ hasn’t caught on quite yet.

The Apple Market Share

Not every Kiwi owns an iPhone. There are many other smartphone brands available in the market, and most of them are cheaper alternatives. In the last quarter of 2016, Apple owned 31% of the vendor share for smartphone shipments to NZ, followed by Samsung, Huawei, Vodafone, Spark, and many others. Since then, its contenders haven’t been sleeping – Samsung released its powerful Samsung 8, Google released Google Pixel, among many other great smartphone releases in the industry as of late. With every year the smartphone competition is only getting more and more intense, potentially decreasing Apple’s market share overall. From here on out, Apple will have to really step up its game to win the hearts of Kiwis across the country.

Mobile payment is not an easily navigable industry, with surcharges and app royalties making the process hard for both banks and businesses to fully commit to any one software like Apple Pay. However, with an increasing number of locations offering payWave technology, and as more Kiwis start relying on their smartphones for virtually everything, New Zealand may well be on its way to leaving their wallets at home.

Get ahead in the industry and make sure your EFTPOS machine has the technology that supports mobile payments such as Apple Pay! Contact the experts here at POSCOM for the best updates and POS technical support!