automotive industry update on surcharge nupay and zero out bank fees
TRANSCRIPT
Automotive Industry’s Approach to Surcharge,No longer compliant from 1 September, 2016
What you need to know to protect your business and bottom line
Matt Kesby0429 725 795
1. Reserve Bank of Australia Changes and ACCC Fines
2. Market shift in Credit Card Usage
3. The 3 approaches to surcharge
Agenda
1. Reserve Bank of Australia Changes and ACCC Fines
The Good News for Merchants: The new surcharging standard will preserve the right of merchants to surcharge
The Good News for Consumers: The new standard ensures that consumers using payment cards from designated systems • eftpos, • the debit and credit systems of MasterCard and Visa, • and the American Express companion card system
Cannot be surcharged in excess of a merchant's cost of acceptance for that card system.
Retailer(Merchant)
Merchant’s Bank
(Acquiring Bank)
Customer’s Bank
(Issuing Bank)
Merchant Service ChargeOr Credit Card Fee
• Guarantees payment• Card reader technology• Customer Service• Rate negotiated between
merchant and their bank
VARIABLE Interchange Fee
• Shares out the costs• Invest in new technologies• Protect the system• Covers points systems• 220 categories of
interchange fees• Changes every month
without notice• Actual cost to business
depends on card types use that day
The Complexity behind Managing this becomes clearer when we understand all true fees that make up surcharge and their variables
ACCC Fines make managing Surcharge on your own a risk
1 September 2016 - Rules are enforced on LARGE MERCHANTS:
The Standard defines a ‘large merchant’ to be one that satisfies at least two of the following requirements:
• it has a consolidated gross revenue of $25 million or more,• the value of its consolidated gross assets is $12.5 million or more,• or it employs 50 or more employees.
1 September 2017 - all smaller businesses
Fines for non-compliance per offence
•600 penalty units ($108,000) for a listed corporation i.e. company listed on the Stock Exchange•60 penalty units ($10,800) for a body corporate - i.e. private company•12 penalty units ($2,160) for a person other than a body corporate. i.e Sole Trader
Electronic Payments Near Field Communication Digital Wallet
2. Market Shift in Credit Card UsageIncreased use = cost increase to merchants unless they pass on cost of acceptance through surcharge
Cash is on the Decline
73%Cash
2005 2013 2018
59%Cash
43%Cash
2021
??%Cash
3. The 3 approaches to surcharge
Option 1: (Not Optimal) Cease to apply surcharge and absorb the costs of each transaction.
Not an acceptable option given the shift from cash to card usage by consumers. Option 2: (High Risk) Manage the application of surcharge internally.
• Reset the surcharge independently for each location every quarter, based on the weighted average merchant service fees including the uncontrollable interchange fees (note most merchants are unaware of this variable charge).
• This method requires each location to calculate surcharge separately with consideration to fluctuating interchange rates that occur based on the variable ratios of low rate to premium Visa and Master Cards.
• Surcharge must include GST even on GST Free goods and services. • Merchants must also ensure Amex has a rate different to eftpos and eftpos can only be a fixed rate. • Surcharge must be reset every 3 months. • Customers must be informed of the rate and rate changes. • Staff must be trained to handle the rate changes and update systems accordingly every quarter.• Merchant covers all costs incurred with changes and fines when errors occur
3. The 3 approaches to surcharge
Option 3: (Simple and Safe) Outsource surcharge management and obtain a low rate fixed surcharge with an accredited compliant platform. NUPAY brings your business Outsourced Surcharge with our Zero Out Bank Fees payments systems that are PCI-DSS level 1 compliant, ensuring your business remains safe. With NUPAY Zero Out Bank Fees Surcharge Eftpos, all of your Merchant Service Fees are offset by a simple low rate surcharge and are 100% compliant with RBA and ACCC. NUPAY uses: ingenico EFTPOS terminals – World’s largest manufacturer ANZ Bank’s EFTPOS terminal Payments app to handle all credit card and eftpos
payments – giving you peace of mind And mPayments (AFSL) technology platform to split the surcharge and payout all fees
so that the business has the ability to trade without the cost of fees impacting the bottom line.
Example $400 Sale
1.8% Surcharge
$400 $7.20
3. The 3 approaches to surcharge
Consider option 3
Next Steps
Submit a copy of the Merchant statements for your locations and Head Office will assess a low rate surcharge to suit your business
Matt Kesby0429 725 795