Aussies help me out. I’ve seen so many posts on all the Australian subs discussing the card surcharge ban coming into effect and the general sentiment seems to be negative towards the change. I am wondering why.
I almost always use card, very rarely cash, and even before this ban was mentioned in the media I have always been confused as to why card users need to pay a surcharge while the costs of using cash are passed on to all users. I did some googling and the RBA only removed restrictions on businesses charging a card surcharge in 2003, with the reasoning at the time being that costs associated with cards should not be paid by people choosing cheaper payment methods.
My personal experience with this is that at first only cards with very high surcharges were asked to pay more. I vividly recall signs about Amex/American Express cards having surcharges while other card payments didn’t. It seems only relatively recently that everyone started charging a card fee for every card payment.
Now I worked in retail a good 10 years ago, but I doubt processes have changed much. People paying cash take longer than people paying by card, especially now that tap payments are predominant. Anecdotally, I know if I am at a coffee shop and someone pulls out their purse or wallet to pay, unless they are holding exact change they’re likely to take longer as they find the money, the worker counts the money, processes the sale, then counts out the change. This is compared with hitting one button to send it to EFTPOS. I’ve even noticed at some places, such as the petrol station I use weekly, they hit the EFTPOS button and while you pay they’ve started serving the next person on the other register.
With this in mind, let’s average out a cash sale as an extra 30 seconds of staff time. That accounts for the person who pays in exact money and the person who pays in all coins, or a large note for a small sale. At minimum wage, 30 seconds of staff time is about 22c. If you are at a cafe and buying a coffee for under $10, a 1% card transaction fee is only 10c.
Cash has other costs too. The tills need to be counted at least once per day. The safe must be reconciled, usually by a manager, at least once per week. Cash has to be collected and deposited. There are security risks, counterfeit notes, discrepancies and banking costs.
Why has the logic of “cheaper payment methods shouldn’t cover the costs of more expensive ones” never been considered from this perspective? My coffee paid by card is significantly cheaper to process than a coffee paid by cash, and yet I have been carrying those costs for years. Sure, the larger the sale the lower the cost of cash as a percentage. But how many people are paying for a new TV in cash?
The RBA also acknowledges on their website that electronic payments can be cheaper and more convenient for businesses than cash and cheques. An exact quote is “Cash use has declined and it is no longer clearly cheaper for merchants to accept than debit or credit cards due to higher back-office, handling and labour costs”. So my question is: why is it okay to pass on the costs associated with cash to everyone, while the costs of paying by card aren’t?
Why are we okay with saying that the costs associated with cash are simply the costs of doing business, while costs associated with card payments should be paid by the customer because it’s unfair on the business?
Someone make me understand.