But when I paid with my credit card through the Me&U app.
A kids chicken schnitzel cost more than I expected.Eddie Jim
The extra charges were,according to the e-receipt,a 10 per cent “venue surcharge” of $1.40 and a 31¢ payment service fee.
Staring at my bill,I suddenly questioned whether I was in the United States or Australia.
The land of the free,as it happens,is also the land where the advertised price bears only a passing resemblance to the price you will pay once state taxes and tips are included - a practice that is becoming more common in Australia,particularly since the height of the pandemic,when we got used to paying by card or app instead of cash.
In December,Reserve Bank governor Michele Bullock said the share of payments made with physical money had shrunk from 70 per cent in 2007 to just 13 per cent late in 2023,.
Take a look at your credit or debit card bill,and it’s likely you’ve been hit by similar payment charges to me,possibly without even realising.
Increasingly,prices listed at cafes,restaurants and pubs are not the price you will pay. Buy a ticket to the movies,theatre or to an art gallery,and you’re also likely to be stung for the convenience of paying electronically. It’s the insidious creep of payment surcharges.
Just like in the United States,rapid mental calculations are needed for every transaction if you want to work out exactly how much you will need to pay when it comes time to settle a bill.
It might seem that the obvious solution to avoiding surcharges is just to pay in cash,but that’s no longer practical or possible in many instances. A growing number of small businesses no longer accept cash,and buying movie tickets in-person with cash,usually just before a session starts,is practically asking for terrible seats. It also costs businesses to keep,count and bank cash.
However,the ones who are really making a killing out of the hidden surcharge boom are the payment providers and banks.
It wasn’t always like this.,the Howard government was adamant that pricing in Australia would be inclusive. The competition watchdog specifically referenced practices in the United States,where costs are “plus plus”,as a situation it wanted to avoid.
“The ACCC does not want to see the United States situation develop where the price on the bill or at the cash register is different to that which was advertised,” they said at the time.
Yet,this is precisely what has happened.
Payment surcharges are a form of drip pricing,a practice that after they advertised specific airfares without disclosing additional booking and service fees until late in the sales process.
when an advertised price becomes unavoidably higher as a transaction progresses:something that’s standard in the United States and is increasingly happening here. As you progress through the transaction,consumers aren’t always fully aware of the mounting additional costs,and the advertised price that got you onboard in the first place moves further and further away.
With the rise of digital banking and payments,consumers now rarely see cash leave their wallets and,as a result,don’t think about what they’re spending,an experience economists call “transaction decoupling”.
I’m happy to pay a surcharge on a Sunday if it’s paying penalty rates for employees and clearly noted on the menu and at cash registers. But when it comes to payment charges,they should be included in the advertised price.
Like paying for electricity,water or rent,these costs are a fixed cost of doing business rather than an extra cost incurred only on certain days of the week or after adding a side of avocado to your brunch order.
The final kicker for me came after I confirmed payment of $15.71,including the venue surcharge and service fee for my kids chicken schnitzel,and the payment app tried to add an automatic tip of 10 per cent for the pub.
I politely declined. We’re not quite the United States yet.
Cara Waters is the city editor for The Age.
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