Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

News Corp. wrong to call credit card surcharges on Opal top-up sneaky

Mark Fletcher
August 26th, 2016 · 28 Comments

News Corp last year ran a report by Benedict Brook, Commuters paying out hundreds in surcharges to top up travel smart cards, in which they claimed:

PUBLIC transport users across Australia could be unwittingly shelling out hundreds of dollars a year on sneaky surcharges to use travel smartcards such as Opal, Myki and Go. But it’s in one city that travellers are most affected — a situation that is only likely to get worse in the New Year.

The hidden costs are being levied by some retailers every time someone uses a credit or debit card to top up their travel smartcard, despite the fact stores already receive a commission for every recharge.

Had Brook done the job you expect of a professional journalist, he would have discovered that newsagents are paid a commission of only 23 cents for a $10 top up and 45 cents for a $20 top up. Our of these fees News Corp. appears to think newsagents should fund the processing costs including credit card fees.

If a customer uses a premium card linked to a frequent flyer or similar program, a $10 transaction could cost more than the commission.

Given the appalling treatment of small business retailers like newsagents by state governments in slashing commission on transport tickets it has become essential for small business newsagents to charge a credit card processing fee to recoup the cost of card processing.

While the repot is from late last year, I have only just seen it thanks to a newsagent colleague bringing it to my attention. They charge a modest surcharge to cover the cost of the card processing. They point out to me they can’t check the exact fee for each time of card as time does not permit. Their suggestion is a flat 50 cent card processing fee. That seems reasonable.

Supermarkets and national c-stores don’t charge a fee. They must be cross-subsidising the fee costs from elsewhere in their business. Sam business newsagents don’t have the capacity to cos-subsidise.

News Corp. should take more care with stories like this. It is wrong to claim it as a sneaky surcharge. The article should have included quotes fro newsagents, giving them an opportunity to explain the costs of taking cards, putting some facts in front of the situation – rather than the emotive pitch that disrespects these small family run businesses on which News Corp relies to support their products (for a low margin too).

15 likes

Category: Ethics · Social responsibility

28 responses so far ↓

  • 1 Neil // Aug 27, 2016 at 10:16 PM

    But to customers, it IS a sneaky surcharge, and newsagents and small c-stores are the worst for it.

    This terrible customer experience where you hit people with a surprise surcharge at the register because they want to pay by card would hardly be worth the money it collects. Why wouldn’t you just roll the merchant and bank charges into COGS and include it in the markup?

    3 likes

  • 2 Colin // Aug 28, 2016 at 7:16 AM

    Neil, I agree.

    Consequence is that some expected services become unsustainable. EG Ezipass which I am close to totally phasing out. Metrocard is harder to resolve.

    2 likes

  • 3 Mark Fletcher // Aug 28, 2016 at 8:28 AM

    Colin, FYI ezipass is not a service. It is a tech platform through which you connect with Touch which is a platform through which you offer recharge, tickets and other services.

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  • 4 Mark Fletcher // Aug 28, 2016 at 8:30 AM

    Neil, for bus tickets, transport ticket top up and similar, retailers are paid a small commission, often less than the cost to them of the card fees associated with the transaction. There is no markup. Had the News Corp. journalist done their job they would have covered that in the story.

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  • 5 Neil // Aug 28, 2016 at 2:56 PM

    You’d roll the fees for them into the markup across everything else. I’d be interested to know under what circumstances the charges would exceed 23c on a $10 transaction. Adding 50c on top of that would have you making money on the “credit card charge”

    I suspect for Opal the government prefer to own the billing relationship with customers and have them on Auto Top Up, it makes much more sense than dealing with retailers.

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  • 6 Mark Fletcher // Aug 28, 2016 at 3:00 PM

    Neil I know a newsagent doing $300,000 a year in top ups. They don’t have the capacity to cover the charged from other products – given their unique situation.

    The core purpose of the blog post was the poor and lazy reporting by News Corp.

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  • 7 eric // Aug 28, 2016 at 5:12 PM

    We are down from$ 1 mil to about less than half, but i really don’t like selling Opal, it is more work and troublesome than paper tickets. and yes i do charge extra for eftpos and cr card payments to cover my bank fees. If they don’t want to pay extra they can go somewhere else i don’t need to waste my time with these kind of customers and my time is not free nor do a slave

    7 likes

  • 8 Bill // Aug 28, 2016 at 5:40 PM

    Neil, when you mean everything else you ignore that the majority of items, IE newspapers, magazines, greeting cards and lotto have set prices, so that leaves very little you would wish others to absorb for your convenience.
    Mark, I have asked previously if there was a way of tracking payment type by category. I wanted to use this in trying to estimate the addition cost accepting lotto by eftpos would cost.
    My gut fee is that most of the fees we pay are on the low value, high maintenance service items such as phone and metro recharge.
    I would expect my eftpos fees would triple with the inclusion of lotto.

    1 likes

  • 9 Amanda // Aug 28, 2016 at 8:32 PM

    The whole problem would not exist if the credit card company charged the consumer and not the retailer.

    3 likes

  • 10 Mark Fletcher // Aug 28, 2016 at 8:35 PM

    Or if the state government’s would pay reasonable commission.

    4 likes

  • 11 Jon // Aug 29, 2016 at 9:28 AM

    Neil we pay $0.35 +gst to accept a Visa debit card so when someone wants to pay for a $1.50 newspaper that we make $0.13 on by card you can see our dilemma.

    1 likes

  • 12 Neil // Sep 1, 2016 at 7:58 AM

    The dilemma is you have a problem that you have a problem and you’re blaming everyone else for it and slapping a charge on it and throwing your hands in the air.

    That’s only going to work for so long until the rise of contactless and mobile pay options takes over.

    A lot of people I talk to about charges like this just walk out of shops and never return if they’re hit with it.

    1 likes

  • 13 Neil // Sep 1, 2016 at 8:51 AM

    http://surchargefree.com.au/

    Some of the quotes on this site ring very true.

    “Customers in the 21st Century don’t expect to be surcharged, which is why it’s such an unpleasant surprise when they are. Successful businesses in this new digital economy will be those who look to keep things as simple, painless and efficient for their customers as possible – and this means doing away with surcharging.”

    – Sam Canning, Cannings Butchers

    1 likes

  • 14 Sunny // Sep 1, 2016 at 9:53 AM

    Neil:

    When you visit one Aldi Store, they has surcharge of credit card payment, everyone happy to pay for it. Aldi also don’t have ‘free’ plastic bags, and most of customers happy to take their own bags or pay for one bag.

    We have two experiments in our shop for this Aldi-style.

    Firstly we choose one Famous brand stationery, sell at cost price, $3.99. and if anyone pay with card, we advised that there is a surcharge. Many people are unhappy with it, some of them walk away without purchase. Because they can purchase it at the same price in Wollies.

    Secondly, we choose one life essential product, sell at cost price, and if anyone pay with card , we advised that there is a surcharge.
    and if ask for a bag, we require 10 cents for the bag to put into the charity bin.
    No a person refuse to purchase it, they happy to pay for the surcharge (because it still cheaper than Woolies with surcharge) or they pay with cash, and happy to pay for the 10 cents for the bag. They come back with their own bag for next repeated purchase.

    We fully agree with “Customers in the 21st Century don’t expect to be surcharged”, but the condition is that no competitors in the market provides the same product or the same service and charge the same price.

    1 likes

  • 15 Sam // Sep 1, 2016 at 10:19 AM

    Neil, Firstly customers are told up front that there will be a surcharge when they choose to pay with credit card so there is nothing sneaky about it.

    Anyway, many of these stores provide theses transporation fare top ups as an extra customer service for their customers not for those who never come to visit them in the first place and are there for their one and only purpose of transportation fare.

    If these so called customers are real customers they would of either purchase a magazine or a greeting card along with their transportation fare then many of these outlets would not charge them the surcharge to recover their cost that are imposed by the merchant facility as they are genunine customers.

    Those who purchase just transporation fare only will only be just that and they will never hit that store again regardless. newsagents are there to serve but they are there to put food on the table like you would be working for someone but they are doing a lot tougher than you give them credit for.

    Neil, I truly hope that you are not one of those customers who only shop in the supermarket and only go into butchers, green grocers and newsagent only because you can’t get it at the supermarket as you will be the reason for the death of small business.

    6 likes

  • 16 Mark Fletcher // Sep 1, 2016 at 11:03 AM

    Neil the big challenge is for retailers of low margin product where the retail price is not controlled by the retailer. In that situation the retailer has little capacity to absorb the cost.

    3 likes

  • 17 Ken // Sep 1, 2016 at 11:21 AM

    Neil I would much rather see the back of your head and be staying profitable than looking you in the eye and taking a loss. I,ll bet you will have a different opinion if the banks remove any or all fees from retailers and lump them on you instead. Heres an idea !!why don,t you ask your bank to start selling opal top ups or phone recharges etc they could no doubt do with the extra revenue. Oh another thought! why not carry some cash, after all it IS still legal tender.

    3 likes

  • 18 Neil // Sep 1, 2016 at 11:37 AM

    Fair point about them not being real customers if they’re only buying a recharge and nothing else – the argument then becomes why are you offering it at all if it just costs you money.

    That newsagents are doing it tough is not a concern for customers though, is it? I mean it’s nice to think that customers care about the shop they’re buying from but it’s not a reality for most.

    Most of my shopping is online or at major stores or online. It’s convenient and less hassle.

    Ken – My Opal is on auto-top up now. I used to do it at a store with my morning bottle of water, breakfast bar and gum purchase but now I just let Opal deal with it all (for no surcharge) and skip the rest until I get to work.

    There’s really no need to carry cash anymore. My phone is my credit card to backup my wallet going missing, and the $50 emergency money I keep on my hasn’t been needed in quite some time.

    0 likes

  • 19 Chris // Sep 1, 2016 at 11:47 AM

    I fully agreed that there should be no charges. The way to solve this would be for suppliers like the government to pay at a respectable level that truly reflects the operating costs of the SME.

    Can I ask if any of the companies pledging to be commission free on that website run on a mark-up of 2.5%, serious question. Let me know if that is true please?
    I cant imagine the tailors and butchers mark up their products by 2.5% or sell products that have commission set by a supplier.

    I vote that every Newsagent in NSW drops Opal at exactly the same time on a Monday morning and refuses to sell Opal. If they don’t raise the commission level then we throw the Opal reader in the bin.

    2 likes

  • 20 Peter B // Sep 1, 2016 at 11:47 AM

    Neil, you think we have a dilemma and blame others.

    No dilemma here, you pay the surcharge on bus tickets or keep fit walking.

    There is no loss in not having your business even if you think so!!

    3 likes

  • 21 Neil // Sep 1, 2016 at 11:52 AM

    @Peter or I just keep it on auto top up and have the best of both worlds 😉

    @Chris – would probably just more more people to auto top up where Opal own the billing relationship. Something they’d no doubt want.

    0 likes

  • 22 Chris // Sep 1, 2016 at 12:09 PM

    That would be a good result as it takes lovely Opal customers out of these retailers so they could focus on the sectors of their business that make money.
    Customers who buy all their products online or from big box retailers are not the people I target. From my experience dealing with people which is lengthy these are the type of customer you don’t want. They gripe about anything and normally have social issues or don’t like being in spaces with the general public which is why they buy online or at major retailers where the relationship person to person is minimal.
    As shown here, someone is spending all of their time having an argument over a minimal charge. if this is something that stresses you out then I would hate to see how you would cope with something major!

    5 likes

  • 23 David@anglevalenews // Sep 1, 2016 at 12:41 PM

    Yep, agree that we cannot be expected to absorb the cost of making someone else’s life convenient.

    At the start of the year we stopped selling stamps. I was sick of people coming in, wanting 50 or 200 stamps and wanting to pay by credit card and getting pissy when I refused. These were the n
    Neils of the world, not customers, but people who are lazy.

    But the one that wins first prize was yesterday.

    A customer posted on Facebook “Nice shop, just a pity you have to buy a card before you can buy a stamp”. Sort of true, as I do keep a few stamps on hand for customers who buy a card and want to post it at once. That is customer service.

    But almost immediately Neil’s “brother” chimed in with “WTF? I’d complain to Australia Post”. What about, I’m not sure.

    The Neil’s of the world won’t pay my rent, but they do provide amusement.

    9 likes

  • 24 Peter // Sep 1, 2016 at 1:12 PM

    This is one of the better examples of fishing I have seen for a while. Neil’s having a fine old time.

    6 likes

  • 25 Mark Fletcher // Sep 3, 2016 at 4:37 PM

    I don’t charge a fee in my newsagency but then I don;t have lotteries or any agency products except phone recharge and phone cards.

    0 likes

  • 26 Mark // Sep 4, 2016 at 9:14 AM

    News Corp surcharge their customers (newsagencies) to pay an invoice by credit card. Sneaky????

    2 likes

  • 27 Andrew // Oct 4, 2016 at 8:09 PM

    It seems the real story is not the surcharging (which the Reserve Bank will kill eventually) but the poor commission paid to retailers by Opal. Which begs the question, why offer it at all? Opal will say because it brings people in to your store I suppose.

    I have a question though, is there more of a commission for new cards vs topups? I went to a newsagent to topup my card once and he tried to convince me to get a new card instead of topping up my existing one. I thought it was strange.

    0 likes

  • 28 Mark Fletcher // Oct 4, 2016 at 9:48 PM

    Andrew the tiny margin newsagents are paid by state governments is the issue. Plus that this has been slashed in recent years by politicians who publicly say how important small business is to them.

    0 likes

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