Cash is no longer king, and that’s becoming costly for Australians.
It all started with the pandemic, when no-one wanted to touch anything anyone else had touched. Tap-and-go payments popped up everywhere, even where you would least expect them, like farmers’ markets.
But it’s been four years since the pandemic, and it’s clear cash is losing the battle against the convenience of tapping a card or punching in a pin code.
However, that’s coming at a cost, and that cost is surcharges we pay for the ‘convenience’ of using a card.
Those couple of cents when you tap your card don’t seem like a lot but it’s estimated Australians are paying almost $1 billion a year in surcharges. That’s a lot of money for the privilege of spending your own money.
And while we just seem to accept the charges, they are actually banned in several large economic centres, including the UK and EU.
There are also problems with how much you are being charged. According to the Australian Competition and Consumer Commission, the surcharge must not be more than what it costs the business to use that payment type. But who ever checks that? I certainly wouldn’t be bothered.
What can you do?
So what can you do to avoid those pesky charges? There are immediate solutions available now and long-term policies on the horizon.
The first one is simple, start using cash again. I get it, this is going to be annoying for some people, and even getting your hand on cash is hard these days. Our suburb’s main street had five ATMs at one point, there is one left. The easiest way is to take out some extra money at the supermarket, but of course you will need to pay on your card for that as well.
But we can’t always pay by cash. Some businesses are card only and some if you do offer to pay in cash don’t have change for you, so you are forced to pay with a card. Which is particularly galling. I believe if you are offering legal tender, it should be accepted regardless of the state of your change till, but I digress.
One way to get around surcharges, or at least to minimise them, is to swipe your card instead of tapping. If you use a debit card, it’s probably what’s called a duel network card, providing eftpos and payments via the card’s own payment system.
Your card will have the word ‘Eftpos’ on the back if it offers this function.
Paying by Eftpos using the swipe option usually incurs a smaller fee, and in many cases no fee at all. If you pay by using your phone, you will need to set this up in your settings. Unfortunately this option is not available on all cards or digital wallets, so you may have to shop around if this function is important to you.
You can also avoid fees by paying by Bpay or automatic transfer payments from your bank account for bills or invoices.
What the government is doing
The amount banks are reaping from surcharging has drawn the government’s attention and, as a result, the Reserve Bank of Australia (RBA) is investigating the issue. Specifically, the review is called the Review of Merchant Card Payment Costs and Surcharging.
“We are going to be looking at the economic circumstances now, and whether surcharging is still fit for purpose as an instrument to improve efficiency in competition,” RBA governor Michele Bullock told a parliamentary committee.
Labor MP Jerome Laxale, also weighed in and told federal parliament in August that banks and global card networks were enjoying “kickbacks” from the “rort” of costs being pushed onto customers who paid with a card.
“Card providers, merchant and technology providers, and the banks are having a laugh here, scraping $4 billion off our bank accounts to provide an essential service that costs less to operate and maintain than its free, non-digital alternative,” he said, citing a Canstar estimate.
“I think Australians have had enough of this rort. Being charged to access your own money simply must change.”
Do you try to avoid surcharges? Are you still using cash? Why not share your experience in the comments section below?
Also read: Scams surge as Aussies losing billions, but are banks doing enough?
What people forget is that at supermarkets etc that don’t charge surcharges, the surcharge is calculated into the asking price so everyone pays it whether they use cards or cash.
For me, I pay cash for my food & general spending. Internet banking for my rent & bills. I refuse to use a card for anything – except petrol, which is pay-at-the-pump, and I use a separate account for it.
I don’t want to be reconciling a 5 or 6 page monthly bank statement, which is what it would be if I used card only.
If you’re smart & savvy, use cash, as then the banks can’t ‘trace’ it, as when you’re applying for a loan, they can see everything you purchase on your card and can easily deem you to be ‘not credit-worthy’, and refuse to offer you a loan. Been there, done that.
I recently went into McDonalds. My purchase was $8.75. I gave her a $10 note and she gave me $1.20 in change. ?? When I questioned the incorrect change she responded they didn’t have any 5 cent pieces. Reluctantly she gave me a 10 cent piece. If she had been honest and up front I would have given her a 5 cent in exchange for the 10 cent piece. This is their sneaky way to still add a “surcharge”.
If Australians are paying $1billion in card surcharges a year that means the Government is receiving $100,000,000 (yes that’s one hundred million dollars) in GST per year so Seriously, do you think for one second that the Government will legislate to remove the surcharge. If the Government does have the surcharge removed they, then will have to get that $100,000,000 revenue from us in some other way.
I have moved my mobile phone account and getting ready to move my internet also.
I disputed an overseas roaming bill so took off the direct debit as didn’t want to pay the bill till it was solved.
Then I find I am being charged a credit card surcharge and a non-direct debit fee as well. It was $2.90 altogether for a bill of $70.91. Is it legal to charge 2 fees?