Credit card surcharges fair or foul?
It's been three years since credit card surcharging was introduced in New Zealand.
The original idea was to let businesses pass on the costs of accepting credit cards, theoretically lowering prices for everyone paying by other means.
But the murkiness around the whole affair, with retailers closely guarding the exact amount they pay in merchant fees, means it's impossible to know if the surcharges are fair or not.
No-one directly regulates surcharges, although the Commerce Commission is currently conducting a survey examining the effects of the new regime.
Last week the consumer watchdog also renewed its probe into Air New Zealand, after receiving more complaints about its surcharges potentially breaching the Fair Trading Act.
A spokesperson said she wasn't aware of any other companies currently under investigation.
But there are plenty of others who deserve a second look.
Here we name some potential offenders and offer tips on avoiding the surcharge - where it's possible to do so.
Air New Zealand has repeatedly claimed that it costs it more to accept credit card payments than it actually recovers in fees. After being investigated once last year, the regulator's second probe will make a judgement on this.
The national carrier charges a range of flat fees per person per flight, depending on the destination.
A one-way ticket to Melbourne currently being promoted is on offer for the bargain $149. But what you don't see in the glossy headline price is the $6 processing fee, which adds another 4 per cent.
For context, most retailers pay merchant fees on credit card payments in the vicinity of 1-2 per cent.
At budget airline Jetstar, the extra charges don't pop up until the sixth step in the booking process, by which point you've already had to fend off endless attempts to sell you more.
On one of its $49 "hot fares" from Christchurch to Auckland, Jetstar hammers you with a $5 fee at the last minute - or a monstrous 10 per cent on the advertised price.
Airlines top the list not just because of the fee itself, but because there's effectively no way to get around it. The single questionable option is internet banking gateway POLi, which banks have urged customers to avoid because of potential security risks.
This lack of viable alternatives makes the 'surcharge' one that should just be clearly factored into advertised ticket prices.
The Aussie duopoly of Ticketmaster and Ticketek are acting in a similar way to the airlines when it comes to surcharges. It's not just the the egregious booking fees, which again escape the advertised prices, but a juicy credit card surcharge slapped on top of each ticket.
Ticketmaster charges a processing fee of up to 2.3 per cent, while Ticketek charges 2.45 per cent to 2.6 per cent depending on card type.
Fancy buying tickets from Ticketek for the upcoming Garbage concert?
After adding the surcharge and an outrageous $5 simply to have a PDF ticket emailed to you - the cheapest option by far - $86.20 has become $93.31.
The fee doesn't apply when you purchase tickets using cash at outlets or box offices.
The problem is, there aren't that many outlets around and they usually only have a limited number of tickets available.
Finally, Ticketmaster has the audacity to charge an extra $2 for every ticket purchased from a physical outlet as well.
The parking meters and machines operated by Wilson Parking and Tournament Parking charge a flat 50c fee for credit card transactions.
By doing some basic maths, we can guess the companies are probably making a killing on the surcharges.
A 50c fee on a cheap $2 parking ticket equates to a whopping 25 per cent surcharge.
Even assuming the companies are paying out 2 per cent in expenses, the average ticket sold would have to be $25 to justify the 50c fee.
Pay with cash where possible.
Cab companies tend to charge a flat fee for processing electronic payments. At Co-op Taxis it's $2.30, and $2 at Corporate Cabs.
Taxis have to invest in the portable card-reading technology, so it might seem reasonable to pass on the costs.
But on a quick $10 taxi ride, that's a huge 20 per cent markup for the unwary traveller.
The only way you can do so is to try and remember to pay cash, because Eftpos usually incurs the surcharge too.
RATES AND FINES
Even local government is getting in on the act.
Tauranga City Council charges a 1.3 per cent credit card fee for fines and rates payments, but claims it does not receive any part of the surcharge.
Auckland Council charges an "online convenience fee" of 2 per cent, with a minimum payment of $2.50.
It also claims it does not receive any part of this fee, even going to the lengths of having it appear as a separate transaction on your credit card statement.
While this may be true, you'd hope a large organisation would have the heft to negotiate a lower merchant fee to pass on to ratepayers.
The good news is local government is happy to take your money in whatever form they can. Fines can be paid in person at most NZ Post shops, over internet banking or over the phone, and rates can also be paid by setting up a direct debit.
Accommodation providers have taken to the surcharges too, but they've mostly made the sensible choice of charging a percentage rather than a flat fee.
SkyCity Hotel and Sudima Hotel both charge 1.5 per cent, which seems reasonable.
Others may be higher, so make sure you check before making a booking.
Although you need a credit card to reserve the room, you can pay the final bill with alternative means - eftpos, cash, or a cleared cheque.
SCRAP THE SURCHARGE?
One of the main arguments in favour of surcharging is that otherwise people who pay by cash or eftpos are subsidising credit card users.
The idea is that it adds an element of user-pays to the shopping experience.
Under this logic, if petrol stations offer restroom facilities but you don't choose to use them, you should be up in arms about subsidising every other customer who does so.
Retailers need to simply factor the costs of accepting credit cards into their prices as a standard cost of business, or not accept them at all.
More importantly, it's unfair to be able to pass on the costs of one form of payment, but not another.
Think of a Wilson Parking meter. Every coin fed through the slot has to be manually collected, counted, stored, transported, and deposited, with all the attached security and risk of theft.
Meanwhile, every card pushed into the slot sends electronic money into Wilson Parking's coffers in the blink of an eye.
And yet no retailer would ever dare introduce a cash surcharge, because cash handling is accepted as a normal cost of business.
Over the ditch, aggressive credit card surcharging since a 2003 law change has prompted the Reserve Bank of Australia to introduce caps this year.
Until surcharges here are capped or repealed, the only thing consumers can do is avoid paying them wherever possible.
Where else have you spotted unfair credit card surcharges? Name and shame in the comments below.
- © Fairfax NZ News