A change to the way thousands of retailers process Tap and Go payments could be leaving customers unknowingly out of pocket despite having not altered their shopping behaviour.
Retailers including Coles, Kmart, Target and Officeworks switched from Visa to the Eftpos network late last year in what they spruiked as a cost-cutting measure for both the consumer and the company.
But the change blindsided some customers with unexpected transaction fees - an unwelcome addition to payments normally free from extra processing costs due to default settings on Visa machines.
One shopper claimed she was hit with $18 worth of transaction fees in a month’s-worth of shopping at Coles, because she had limited Eftpos transactions per month with her specific bank card.
She previously had unlimited credit transactions, which was how payments were processed by default when Coles operated using the Visa system.
“I went to my bank and they told me it was that Coles had changed their machines from Visa to Eftpos so they didn’t have to pay Visa for the transactions,” the woman told Yahoo News Australia.
“I asked at Coles and the staff said they knew nothing about the changes.”
Consumers who shop at the thousands of retailers impacted frequently could easily be exceeding their monthly fee-free transactions by using the Tap and Go function, without even knowing it.
‘Coles does not charge customers any fees for using any cards’
A spokesman for Coles said: “a small number of financial institutions have elected to charge their customers high fees for paying with Eftpos at any retailer in Australia”.
“Coles does not charge customers any fees for using any cards, regardless of whether they use Visa or Eftpos,” the spokesman said.
A spokesperson from the Newcastle Permanent bank told Yahoo News Australia it was working with customers who held accounts that might be affected by changes to Tap and Go payments.
“We are aware of a decision by Coles Group and some other retailers to change the transaction type on Tap & Go payments through their payment terminals which may impact customers depending on the type of account they have,” the spokesperson said.
“We continue to support our customers to help them identify which accounts best suit their banking and transaction needs.
“We encourage any of our customers to contact us for a ‘health check’ of their banking.”
Eftpos Head of Corporate Affairs and Communications Warwick Ponder told Yahoo News Australia the issue impacted a limited number of people who banked with certain financial institutions.
Tap and Go charges are outdated
“This issue impacts a very small percentage of consumers who bank with financial institutions that continue to charge per transaction fees on a small number of accounts,” Mr Ponder said.
“Eftpos strongly believes that customers should not be impacted, as the funds come out of the same account.
“These cards are dual network cards and merchants can choose to route transactions to either Eftpos or the other schemes to manage costs, which can have a positive impact for the merchant and all of their customers.
He said while the “vast majority of financial institutions changed this practice a long time ago” consumers who noticed fees on Tap and Go payments should contact their bank or consider using a different card.
“Alternatively, customers can choose to dock their cards and select a different network.”
How can I avoid card fees while using Tap and Go?
To avoid additional charges, customers can insert their card into the Eftpos machine and select the “credit” option. This will ensure their payment is processed via the Visa network and not be counted as an Eftpos transaction.
The other option is to utilise a mobile phone paying app like Google Pay, Apple Pay or Samsung Pay. By paying with a smartphone, shoppers can avoid being stung a fee for an eftpos transaction.
Executive director at the Australian Retailers Association, Russel Zimmermann, told Yahoo News Australia it was people with old school “legacy accounts” rather than “all you can eat” accounts most likely to find themselves being hit with unexpected transaction fees.
He said it was time banks still offering these types of accounts made a “move up to 21st century”.
Mr Zimmerman added the onus was more so on financial institutions to inform customers about potential card fees rather than on retailers.
Coles is ‘among 20,000 Australian retailers’ to bring in change
A Coles spokesperson told Yahoo News Australia that customers would not be charged by them for paying with a certain card, because it was financial institutions that imposed the fees.
Despite this, they said “most financial institutions do not charge their cardholders for using Eftpos”.
“Coles Group is among more than 20,000 Australian retailers who have changed the way they process some debit card payments, so when a customer taps their Visa debit card the purchase will be processed via Eftpos, instead of Visa/credit.
“If a customer wishes to pay via Visa/credit, they simply need to insert their card and select credit.”
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