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5 months ago
25
The Barefoot Investor has warned Aussies to look out for hidden fees every time they make a cashless payment using their phone.
Scott Pape, 46, shared the advice in his column for the Daily Telegraph, revealing the true cost of convenience when shoppers tap-and-go at the checkout.
'What most people don’t know is that, when they tap, their bank generally defaults that payment through Visa or MasterCard, who pays them a fee – instead of defaulting that payment through the much cheaper bank-owned EFTPOS,' he wrote.
'Talk about a rort!'
The savvy investor said Aussies are getting 'slugged' a surcharge of up to two per cent every time they tap.
The Barefoot Investor said Aussies are being 'slugged' with a higher fee every time they tap their phone or card when buying goods or services
Scott Pape (pictured) said Aussies need to start using their physical card again in shops by swiping or inserting them, as this won't incur a higher fee like tapping
'Every transaction could be costing you upwards of two hundred clams a year (collectively a $1 billion-a-year rort, according to the Ombudsman),' he said.
Mr Pape advised shoppers can avoid the higher fee if they change the settings on their phone.
'On an iPhone, open "Settings", go to "Wallet & Apple Pay", then tap your debit card. Then look for "Payment Option",' he said.
'It will generally have "MasterCard" or "Visa" preselected, but instead you should select "eftpos SAV",' he said.
The Barefoot Investor said not all cards allow this change and consumers who own an Android will need to check with their bank on how to change the setting as it is 'trickier'.
The investor's next tip is something most Aussies can get back into the habit of doing: actually using their physical card - and not tapping it.
'I know it's annoying but if you swipe and insert your card you can choose "cheque" or "savings" and it’ll go through the EFTPOS system, which at the bigger retailers means you’ll be less likely to be charged,' he said.
However, Mr Pape said the problem is that many shops still have a surcharge, so even if a shopper has chosen the 'eftpos' option, they still might be charged extra.
Mr Pape said the only course of action is that the Australian government must scrap surcharge fees - like they have in the US and the UK - and believes it could be an election 'winner'.
Australian shoppers can save around an estimated $200 each year by not tapping their card or phone
According to Finder.com.au, many Australians don't realise that their debit card can be hit with the same transaction fees as a credit card.
'Many shoppers are unaware that Aldi’s 0.5% credit card surcharge also applies to contactless payments made with a Mastercard or Visa debit card,' its website said.
'You can avoid this additional fee by not using contactless payments. Instead, make sure to swipe or insert your debit card at the payment terminal.'
The advice from the Barefoot Investor comes as Australia slowly draws closer to becoming a cashless society.
The Covid pandemic supercharged a trend toward digital transactions that was already underway, with the use of digital wallet payments on smartphones and watches soaring from $746million in 2018 to more than $93billion in 2022.
By the end of 2022 cash only accounted for 13 per cent of Australian consumer payments compared to 70 per cent in 2007.
But one of the issues with cashless payments is that digital transactions often attract a fee, which might not be obvious at the time of purchase.
Warwick Ponder, the former executive manager of corporate affairs and communications at eftpos Payments Australia, told Daily Mail Australia that Paywave devices often levied a delayed credit surcharge.
Mr Ponder advised customers to avoid tapping as much as possible, as there could be a significant period of time before the money deducted registers in their account.
Only cash does not attract any fees or surcharges when making a payment.
English (US)