Perspective with Heather du Plessis-Allan: Here's why the surcharge ban will fix nothing

The news of the day, politically, is that surcharges are gone, as the Government's just banned them.

You know what I'm talking about here, right? They're the little extra amount that you get pinged when you turn up at the dairy and you use your credit card, or you use your paywave - it's gone from May next year.

The big sell behind this is basically that it's to help you with the cost of living crisis.

Now, I hate to do this because I know you're thinking, "Oh, yay." And I'm totally gonna rain on that parade for you.

Don't get excited, this is gonna fix nothing. You are still gonna end up paying that cost somehow, probably just through the cost of the bottle of milk that you're buying. Or your haircut, or your sushi or whatever it is - it's gonna be built into the price because the business still has the cost.

Nothing is changing there. They've still got to pay that merchant fee.

Now, a merchant fee is a very complicated set of charges which the business gets lumped with. And most businesses actually have no bloody idea what makes up that merchant fee.

There's a fee from the credit card companies, there's a fee for moving money from the banks, there's the EFTPOS providers - the whole thing gets lumped into the merchant fee and that has not gone away.

What's only gone away is the business's ability to be able to recover the cost of some of that through the surcharge.

And by the way, the cost of that thing is actually quite big. I've read about one business - just one shop - that pays about $14,000 in a year just for that, just for the merchant fee, to be able to do business electronically.

Now, what's going to happen if you go to that shop is, because that guy can't now pass it on to you with a 2 percent, 0.7 percent, 1 percent surcharge or whatever, he's simply going to add it to the cost of his product so that across the year, he makes that $14,000 back.

Also, another reason why you shouldn't get excited about it is that this ban does not include anything that you buy online.

So you're buying your Air New Zealand tickets? You're still gonna be paying that little $6 handling fee.

You're buying some tickets for a concert from Ticketmaster? You're still paying that handling fee.

Maybe you want to head along to Banksy? Yep, you're still gonna be paying yourself a nice little $8 handling fee.

And the problem with that is that these are some of the most egregious examples, I would have thought, of surcharges just bearing no resemblance to reality - but they still slip through this.

So instead of actually sorting out the backroom problems and the real gnarly issues - what has been charged by the banks and the EFTPOS companies and the credit card companies and really excessive surcharges - the Government's just taken the easy option and brought in a ban on the little stuff you buy from the dairy.

Good headline. Unfortunately, though, just a charade.

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Episode Transcript

Speaker 1 (00:00):
Right, Well, the news of the day politically is their
surcharges are gone. The government's just banned them. And you
know what I'm talking about here, right They are that
little extra amount that you get pinged when you turn
up at the dairy and you use your credit card
or you use your payWave. Gone from May next year.
And the big cell behind this basically is that it's
to help you with the cost of living crisis. Now,

(00:22):
I hate to do this because i know you're thinking,
oh yay, yeah, and I'm totally going to rain on
that parade for you. Don't get excited. This is going
to fix nothing. You are still going to end up
paying that cost somehow, probably just through the cost of
the bottle of milk that you're buying. It'll be in
there now, or your haircut or your sushi or whatever
it is. It's going to be built into the price
because the business still has the cost. Nothing is changing there.

(00:44):
They've still got to pay that merchant fee. Now, a
merchant fee is a very complicated set of charges which
the business gets lumped with and most businesses actually have
bloody no idea what makes up that merchant fee. There's
a fee from the credit card companies, there's a feed
fee for moving money from the banks the f poss providers.
The whole thing gets lumped into the merchant fee. That
has not gone away. What's only gone away is the

(01:06):
business's ability to be able to recover the cost of
some of that through the surcharge. And by the way,
the cost of that thing is actually quite big. I mean,
I've read about one business, just one shop, that pays
about fourteen thousand dollars in a year just for that,
just for the merchant fee, just to be able to
do business electronically. Now that what's gonna happen if you

(01:27):
go to that shop is because that guy can't now
pass it on to you with a two percent, zero
point seven percent, one percent surcharge or whatever. He's simply
going to add it to the cost of his product,
so that across the year he makes that fourteen thousand
dollars back. Also, why you shouldn't get excited about it
is that this ban does not include anything that you
buy online. You're buying your Air New Zealand tickets, Yep,

(01:47):
you're still gonna be paying that little six dollar handling fee.
You're buying some tickets for a concert from ticket Master.
Maybe you want to head along to Banksy go check
that out. Yep, you're still gonna be paying yourself a little,
a nice little eight dollar handling fee. And the problem
with that is that these are some of the most
egregious examples I would have thought of surcharges just bearing
no resemblance to reality. But they still slip through this.
So instead of actually sorting out the back room problems

(02:09):
and the real gnarly issues and what has been charged
by the banks and the f pos companies and the
credit card companies and really excessive surcharges, the government's just
taken the easy option and brought in a ban on
the little stuff you buy from the dairy good headline. Unfortunately, though,
just a charade. For more from Heather Duplessy Allen Drive,
listen live to news talks that'd be from four pm weekdays,

(02:30):
or follow the podcast on iHeartRadio.