Consumer warning about PayWave surcharges

PayWave, the ability to make a purchase with the touch of a credit or debit card, has taken off in recent years, but convenience always comes at a cost.

Now, most payment machines display a sign warning of a surcharge, and that surcharge is not the same everywhere.

PayWave’s standard surcharge in New Zealand is 2.5% of the price of a purchase. At Remedy Coffee in Auckland city centre, the surcharge is 1.8%.

Owner Richard O’Hanlon said most customers were still using the service.

He told First Up that he saw PayWave emerge in the two years leading up to 2020.

“And then after Covid, when everything became contactless, that’s when it really hit home.”

Richard O'Hanlon, owner of Remedy Coffee.

Your company pays a flat fee to the Eftpos company to use their system, but it is actually the merchant service fees charged by banks covering credit card and PayWave transactions that cost them the most money.

“In a quiet month, that can be $2,000, $3,000, and in a busy month it can be $3,000 to $4,000 that we have to pay as a business.

“And as a small independent coffee shop where rates are going up, wages are going up, which they should, everything is going up. Milk, coffee. Then we have to find a way to find that kind of money.”

O’Hanlon said large businesses such as supermarkets and fast food chains were not bothered by the surcharges because of their high sales volume.

However, smaller companies like yours had to consider their costs carefully.

The amount retailers add to the surcharge is at their discretion, but Consumer NZ’s Jessica Walker said the surcharge should never be more than 2.5%.

“We’ve done some calculations and after discussions with the Commerce Commission, we arrived at 2.5%,” he told First Up.

“So anything over 2.5% we would say is in the realm of excessive, but we wouldn’t expect many people who pay by credit card to pay 2.5%.

“I think most people should see that a 1.5% or 2% surcharge seems to be the norm, but we have had complaints from people paying well above that 2 or 2.5% surcharge.”

Consumer NZ said any surcharges should be clearly displayed and asked people to get in touch if they were charged more than 2.5% when using PayWave.

Unlike Remedy Coffee, popular Vietnamese restaurant Tem, also in central Auckland, does not charge a PayWave surcharge.

Co-owner Tina told First Up she was happy to cover the cost herself.

“I try to make the customer happy,” he said. “Because now there is a lot of competition and a lot of food.

Tina and Tom in Vietnamese Tem.

“Even if you cook well, you look good, your food is healthy, your food is good, but people will look at the money.”

Apps like Apple Pay on mobile phones have made PayWave even easier. Several people who spoke to First Up didn’t even use a wallet.

“I just don’t carry my credit card. I just have my phone all the time,” one person said.

“I prefer to leave my credit card at home… Then I never lose it.”

However, another said they inserted their card and entered their PIN unless they were “basically out on the town drinking.”

“It’s like, how much do I value my time? It’s 30 cents for an average transaction and it takes six seconds. So if you multiply that by the hour, that’s a lot of money… a lot less discipline when I’m drinking.”

By RNZ’s Leonard Powell

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