The Barefoot Investor has warned Australians to look out for hidden fees whenever they make a cashless payment using their phone.
Scott Pape, 46, shared the advice in his column for the Daily Telegraphrevealing the true cost of convenience when shoppers tap and walk out at checkout.
“What most people don’t know is that when they tap, their bank usually doesn’t make the payment through Visa or MasterCard, who pays them a fee, instead through the much cheaper bank-owned EFTPOS. bank,” he wrote.
‘Talk about a disgrace!’
The savvy investor said Australians are hit with a surcharge of up to two per cent every time they tap into their funds.
The Barefoot Investor said Australians are being “hit” with a higher fee every time they touch their phone or card when purchasing goods or services.
Scott Pape (pictured) said Australians should start using their physical card again in stores by swiping or swiping it, as this won’t result in a higher fee like tapping.
“Each transaction could cost you more than two hundred clams a year (collectively, a billion dollars a year, according to the Ombudsman),” he said.
Pape cautioned that buyers can avoid the higher rate by changing their phone’s settings.
‘On an iPhone, open Settings, go to Wallet & Apple Pay, then tap your debit card. Then look for “Payment Option,” he said.
“Usually you will have “MasterCard” or “Visa” preselected, but you will need to select “eftpos SAV” instead,” he said.
The Barefoot Investor said that not all cards allow this change and that consumers who own an Android will need to check with their bank how to change the settings as it is “more complicated.”
The next investor tip is something most Australians can get back into the habit of doing: using your physical card and not touching it.
“I know it’s annoying, but if you swipe and insert your card, you can choose ‘cheque’ or ‘savings’ and it will go through the EFTPOS system, which at larger retailers means you’ll be less likely to be charged.” he said.
However, Pape said the problem is that many stores still have a surcharge, so even if a buyer has chosen the ‘eftpos’ option, they can still be charged extra.
Pape said the only course of action is for the Australian government to remove surcharges – as they have done in the US and UK – and believes that could be an electoral “winner”.
Australian shoppers can save around $200 each year by not touching their card or phone.
According Finder.com.auMany Australians don’t realize that their debit card can suffer 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,” their website said.
‘You can avoid this additional fee if you don’t use contactless payments. Instead, be sure to swipe or insert your debit card into the payment terminal.
Barefoot Investor’s advice comes as Australia slowly moves towards becoming a cashless society.
The Covid pandemic fueled a trend toward digital transactions that was already underway, with the use of digital wallet payments on smartphones and watches rising from $746 million in 2018 to more than $93 billion 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 problems with cashless payments is that digital transactions often come with a fee, which may not be obvious at the time of purchase.
Warwick Ponder, former executive director of corporate affairs and communications at eftpos Payments Australia, told Daily Mail Australia that Paywave devices often charged a late credit fee.
Ponder advised customers to avoid tapping as much as possible, as it could take a significant period of time before the deducted money posts to their account.
Cash Only incurs no fees or surcharges when making a payment.