The Barefoot Investor has warned Australians to look out for hidden charges every time they make a cash payment with their phone.
Scott Pape, 46, shared the advice in his column for the Daily telegramrevealing the true cost of convenience when customers tap and go at the checkout.
‘What most people don’t know is that when they tap, their bank typically defaults the payment through Visa or MasterCard, which pays them a fee – rather than defaulting that payment through the much cheaper EFTPOS from the bank,” he wrote.
“Talk about a mistake!”
The savvy investor said Aussies will face a surcharge of up to two percent every time they tap.
The Barefoot Investor said Aussies are being ‘hit’ with a higher fee every time they tap their phone or card when purchasing goods or services
Scott Pape (pictured) said Australians should start using their physical cards again in stores by swiping or inserting them as this won’t incur higher fees like tapping
“Each transaction could cost you more than 200 mussels a year (collectively, according to the Ombudsman, a billion dollars a year),” he said.
Mr Pape advised that shoppers can avoid the higher charges if they change the settings on their phone.
On an iPhone, open Settings, go to Wallet & Apple Pay, then tap your debit card. Then search for ‘Payment Option,’” he said.
“Normally ‘MasterCard’ or ‘Visa’ is pre-selected, but you should select ‘eftpos SAV’ instead,” he said.
The Barefoot Investor said that not all cards allow this change and that Android-owning consumers should check with their bank to find out how to change the setting as it is ‘more difficult’.
The next investor tip is something most Aussies can get back into the habit of: actually using their physical card – and not tapping it.
‘I know it’s annoying, but when you swipe and insert your card you can choose ‘cheque’ or ‘save’ and it goes through the EFTPOS system, which at the larger retailers means you’re less likely to be charged be brought,” he said.
However, Mr Pape said the problem is that many stores still charge a surcharge, so even if a customer has chosen the ‘eftpos’ option, they may still be charged a surcharge.
Mr Pape said the only course of action is for the Australian government to scrap the surcharges – as they have done in the US and Britain – and believes the Australian government could be a “winner” of the election.
It is estimated that Australian shoppers can save around $200 every year by not tapping their card or phone
According to Finder.com.auMany Australians do not realize that their debit card has the same transaction fees as a credit card.
“Many consumers are unaware that Aldi’s 0.5% credit card surcharge also applies to contactless payments made with a Mastercard or Visa debit card,” the website said.
‘You can avoid these extra costs by not using contactless payments. Instead, make sure you get or insert your debit card at the payment terminal.’
The Barefoot Investor’s advice comes as Australia slowly moves closer to becoming a cashless society.
The Covid pandemic has fueled a trend towards 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.
At the end of 2022, cash only accounted for 13 percent of Australian consumer payments, down from 70 percent in 2007.
But one of the problems with cash payments is that digital transactions often incur fees, which may not be apparent 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 charged a delayed credit fee.
Mr Ponder advised customers to avoid eavesdropping as much as possible as it can take a significant amount of time for the debited money to be recorded in their account.
Cash only does not incur any fees or charges when making a payment.