No, you don’t have to pay extra or buy more to to swipe your card, says experts

Did you know that you don’t actually have to spend more than R50 to swipe your card? You also don’t have to pay an additional cost on a priced item just because you want to pay via your debit card.

In fact, merchants who make you do this are actually engaging in a prohibited practice, says the Payment Association of South Africa.

According to the Interchange Policy of South Africa, as presented by the National Payment System Department of the South African Reserve Bank, the ‘No Surcharge Rule’ strictly stipulated that surcharging on any payment instrument should not be allowed to prevent discrimination of certain types of payment methods.

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“The issue of concern is that some merchants may impose surcharging to recover part of the service fee or generate extra revenue.

“Surcharging is seen as a form of tax for using a certain type of payment instrument or method, and may therefore deter consumers from using a particular payment instrument or method.

Cost recovery mechanism

“Although this rule may be seen as a cost-recovery mechanism for merchants for accepting a payment instrument or method, merchants should benefit from widespread usage of payment instruments or methods without surcharging,” the department says.

Meanwhile, the Payment Association of South Africa website states that merchants should commit to providing goods or services purchased with a card at prices that do not exceed the prices shown for those goods or services.

They are also told not to discriminate against any cardholder by adding a surcharge nor set a minimum or maximum transaction amount.

Daniel Kaan, FNB Commercial Transact Pillar CEO, told The Citizen that the practice of surcharging and setting a minimal transaction amount is prohibited for FNB Merchant Services clients in terms of their contractual agreements, regardless of the type of merchant or the segment which the merchant forms part of.

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Cashless society

South Africa is looking to go cashless in the near future. The Payment Association of South Africa predicts that this should happen by 2030.

Diana Bresendale, graduate of the University of Stellenbosch Business School, says: “It is clear that physical cash will be replaced by digital money but maintain its function and its value will continue to be determined through monetary policy.

“Digital money is more cost-effective than physical cash and these savings can be passed on to individuals and businesses.”

But she also found that informal traders are hesitant to adopt cashless payments. Bresendale says that the informal sector depends on cash exclusively for transactions.

Is South Africa ready for a cashless society?

South Africans seems to be hesitant to go completely cashless. A case in point was the uproar seen on social media when Woolworths announced that its cafés would be going cashless.

Even though the South African Reserve Bank put out a statement saying that companies, including retailers, are not obliged to accept cash as a means of payment, a large number of South Africans were still insisting that cash was king.

Experts believe this sort of reaction is as a result of the digital divide. But in 2022, BankservAfrica announced that it was working to close the gap, through its Rapid Payments Programme.

The programme requires all South African banks to build simpler, more cost-effective real-time payment functionality into their product offering to accommodate high-volume, low-value transactions.