The Commerce Commission has reportedly raised concerns with many large businesses over their excessive level of surcharges on customers using contactless payment methods. The commission has confirmed that it has written to many large firms on the issue, particularly when it came to those swiping or inserting their debit cards. According to the regulator, the latter kind of transaction should not incur fees.
Under the recently passed Retail Payment System Bill, surcharges on contactless payments are capped at 0.2% or 5 cents for every $25. The interchange fees for online debit card transactions were also capped at 0.6%. These limitations were introduced to help reduce the fees applied when credit or debit card transactions were made, allowing businesses and consumers to save money.
Reports from earlier in the year found that some businesses were charging excessively high surcharges with one identified contactless payment for a $21.50 purchase attracting a 54-cent charge instead of the prescribed 4.3 cents. The commission did not however identify this business, nor those contacted over similar behaviour.
Commerce Commission chairperson, Dr John Small, said that it was worrisome how many consumers did not know they had options when it came to paying surcharges at the end of their transactions. He clarified that most in-person card payments allowed customers to opt to swipe or insert their debit or EFTPOS card instead of using the contactless function. Making this choice would allow consumers to avoid incurring a fee.
Dr Small added that he was also concerned about the level of fees that should be in line with the costs of the transaction to the business. He said that the commission was not opposed to surcharges that were in line with the costs of accepting payment but did want merchants to better educate their customers about their payment options.
He said that businesses were required to clearly disclose any surcharges being applied and accurately describe why as per the Fair Trading Act. He confirmed that the commission had published and dispatched educational materials to merchants that would help them in educating their customers about their payment options as part of the crackdown’s support efforts.
Businesses have also been urged to get in touch with their payment service providers if there is any uncertainty around the costs of accepting and processing the different payment options. In some cases, there may be cheaper or more appropriate plans available from the provider. Dr Small said that with these changes, he expects consumers to start seeing a reduction in their surcharges for contactless and online payments when using their Mastercard and Visa cards.
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