NZ Waterpolo card charges seem ‘excessive’

More and more retailers are imposing higher and higher card charges, and now they look set to succeed in pushing back against a low cap or ban on credit card surcharges.
The Commerce Commission is to report back in December on proposals including a 0.7 percent cap on surcharges – a solution favoured by minister Andrew Bayly but vociferously opposed by some in the finance and retail sectors.
In the latest example of high card charges, NZ Waterpolo acknowledges imposing not just a high charge on the fees it charges members, but also a percentage charge on the fixed charge. And some of that goes not to cover transaction costs, but to the organisation and its suppliers.
Coming up: The cost of cash, this week at Newsroom Pro
NZ Waterpolo’s finance manager Pamela Scheirlinck says the organisation will reconsider its surcharges, after the Commerce Commission expressed concern. “Thanks for bringing the issue to my attention.”
It charges the same $35 subscription for all its 2700 registered members, regardless of their age group.
For those who pay by credit card online, it imposes an additional $1.60 surcharge. This is comprised of $1.24 to Stripe, 30c to Friendly Manager, and an additional 6c to NZ Waterpolo.
Then, it imposes an additional 2.8 percent surcharge, on top of that – which means there’s a surcharge on a surcharge.
All up, that comes to 7.49 percent ($2.62) in surcharges, on every subscription. Subs are only a portion of the organisation’s income from customers and players, which topped $1.43m in the last reported financial year.
Only events ticketing agencies Ticketek and Ticketmaster are known to charge comparable or higher fees in New Zealand, and the Commerce Commission has signalled it’s investigating them.
Newsroom reported in June that the commission had written to airlines, telecommunications companies, ticketing and parking bodies, and local authorities. A Newsroom survey identified at least 17 local councils charging above the odds – 2 percent or more on card transactions.
A Kantar Public survey, commissioned by the Commerce Commission, shows a big increase in merchants applying surcharges, some as high as nine percent, and some even applying surcharges to Eftpos transactions that should be free.
Retailers have argued that until banks are forced to lower merchant service fees, retailers must be allowed to keep imposing surcharges.
Matt Lewer, the Commerce Commission head of payments, says any surcharges should only reflect the costs of accepting the payment, so NZ Waterpolo’s charges seem excessive.
A charge of 7.49 percent is far more than the fees of even the priciest online payment providers.
The commission has seen rates offered by some online payment providers (like Stripe, via Shopify) of around 2.8 percent, but these tend to be not just for processing a specific payment and include more general costs of doing business, such as website applications.
“Surcharges at this level are therefore likely to be too high,” he says. “Merchants seeking to surcharge for card payments can ask their provider for greater transparency of costs so they can set surcharges at an acceptable level.”
Any fixed costs that apply to ‘all transactions’ should be included in the headline price of a good or service, he adds.
“Merchants must not mislead a consumer with regard to a surcharge or fee, and must ensure customers are made aware of a surcharge before they make a decision to purchase, so they can decide whether to pay it or go elsewhere.
“A merchant that is surcharging appropriately would provide customers with at least one alternative payment method that does not incur a surcharge. So you’d expect to have an option of actually paying $35 for the annual subscription.”
Lewer confirms the commission expects to publish a draft decision in December, with proposed changes to regulations that apply to card fees.
“We are looking into whether New Zealanders are paying too much to make and receive payments using Mastercard and Visa cards,” he says. “We think there is an opportunity to reduce and simplify the fees to businesses, and subsequently any surcharges that get passed on to consumers.”
Australia is set to ban debit card surcharges as part of a crackdown on consumer fees to ease financial pressure on households.
In a Newstalk radio interview last week, Commerce Minister Andrew Bayly said he was considering capping interbank charges at 0.2 percent, banning debit card surcharges, and capping credit card surcharges at perhaps 0.7 percent. He was waiting to receive advice from the agency before making decisions.
One of the proposals that the Commerce Commission has been consulting on since July is to reduce the interbank charge from 0.7 percent to 0.2 percent; other proposals are to cap the merchant services fee at 0.7 percent, or even to cap point-of-sale surcharges at 0.7 percent.
The commission has been more reticent about imposing a hard cap on surcharges to consumers, but the minister is gung ho, saying it’s an issue that he’s “very interested in”.
“The total surcharge, there will be a clarity around that, and then the retailer or whatever will be able to be clear about that,” Bayly said. “They talked about an interbank charge of 0.2 percent, and 0.7 percent for a total surcharge. But look, let’s wait until the Commerce Commission finishes its report.”
Despite Australia’s move towards a complete ban, and support for a ban from credit card companies that would rather see costs absorbed into the total transaction, Lewer says a ban here in New Zealand would likely harm small-to-medium enterprises and consumers.
“The SMEs would either have to absorb higher payment costs or increase their prices which would be passed on to all consumers regardless of what payment method they use,” he tells Newsroom.
“Our approach has been to reduce and simplify the fees to businesses, rather than simply set a surcharge limit.
“Businesses face different costs and there is generally a low understanding of what their costs are, so if you set the limit too high, there is a concern that it would be seen as an endorsed target that any merchant could set surcharges at, and if you set the limit too low, then businesses (mostly SMEs) will have to absorb costs above the cap.”
The commission’s consultation paper presents a cap on surcharges as a last resort, if banks and retailers fail to pass on proposed reductions in bank interchange fees. It suggests that credit card surcharges should naturally drop to about 0.7 percent.
“If merchants did not respond to a reduction in merchant service fees by reducing surcharges, we could seek to address this by setting caps on maximum surcharges that can be applied and publicising this cap,” the paper says.
“We could address this by targeting merchant surcharging behaviour or terminal provider support. This would provide for much simpler monitoring of compliance by consumers and us. We recognise that imposing regulation here would nonetheless involve costs. Therefore, we would prefer to see if simplification largely resolves this issue.”
Putting in a surcharging cap now when merchant service fees are very complex would result in higher compliance costs for businesses and not be easy for us or consumers to monitor. However, we do expect terminal providers, if they are asked to apply a surcharge rate of more than 2%, to sight merchant service fee statements to confirm businesses’ average cost of acceptance.”