The 50c charge many shops levy on Leap Card top-ups has provoked hurled curses, customer walkouts, and last chances since it became widespread over the last 18 months.
And documents obtained through a Freedom of Information (FOIA) request show that, twice in the past year, these charges have also prompted the contractors who run the scheme for the National Transport Authority to tell the NTA they were going to remove shops from it.
Although the shop owners are often cast as the villains in this conflict, they are often just as frustrated as the travellers. They say they’ve got to charge these extra fees to make even a slim profit on Leap Card transactions.
Some of this aggravation might soon come to an end for both sides, with new rules slated to take effect on 9 December that are part of the government’s effort to encourage us to use our cards more often and our cash more rarely. More on that later.
Leap Card Top-Up Fees
In case you’re new in town or travel by car or something, Leap Cards are those green cards that allow travellers to pay their fares on Dublin Bus, the Luas, Bus Eireann, and Irish Rail, at prices that are usually about 20 percent cheaper than paying cash for single fares.
There are about 400 agents in Dublin where you can top-up your Leap card. They can charge a fee for processing an electronic payment, like a debit or credit card. But they’re not allowed to levy a fee on that transaction if you’re paying in cash.
That’s when they can get into trouble.
The NTA wouldn’t comment on the removal of shops from the system, except to say it was a matter for the Leap Card’s commercial operators, a partnership between e-commerce firm Payzone and technology provider Hewlett-Packard (HP). A spokesperson for that partnership had not replied to questions on the issue by the time this was published.
However, we know that, in late 2014, NTA officials raised concerns about what was happening when money changed hands in shops for Leap Card top-ups. That November, its customer-support chief reported a rising number of complaints about shops charging an extra fee for Leap Card top-ups.
“NTA is opposed to all surcharging,” wrote Barry Dorgan, who was senior manager for Leap Card operations in November 2014. “If they are surcharging on cash then it [is] absolutely not acceptable and if necessary we can take the Leap facility away.”
“However, if paying by credit/debit card it is less clear – we don’t oblige shops to accept [cards] and we don’t decide who processes their debit/credit cards nor the cost of doing that for any shopkeeper, so it is a bit tricky,” Dorgan added.
In most cases, warnings were enough to persuade shops to stop charging top-up fees, and the scheme’s officials suggested that the problem was that shop assistants didn’t understand the nuances of the system, and applied a fee whether the customer was paying by cash or card.
Some agents, however, needed more persuasion. Like a retailer in the Liberties who was removed from the scheme in April of this year. HP and Payzone staff discussed by email:
“We spoke with the owner this morning, the fee is being applied to cash transactions and the retailer is refusing to remove it. Can you please advise the position you would like us to take?” was the question.
“Close him down please, that is a fundamental breach of scheme rules,” was the response.
Payzone then sent a formal letter to say the shop’s Leap service would be disabled later in the month – and let the NTA know what had happened “in case you get an angry shopkeeper on”.
Although the NTA and its contractors can take action against shops which charge fees on cash payments, there’s nothing they can do about fees on debit-card payments.
Why 50c?
The fee shops charge for a top-up is discretionary, and in the records seen by Dublin Inquirer, varies between 20c and 50c – but 50c is the most common by far.
“Many shops are reluctant to accept such cards for small value transactions, as the banking charges in effect can wipe out their profit margin,” a contractor wrote in response to an NTA customer support manager. “This is why we are seeing increasing amounts of small shops looking to add a fee.”
Under the Consumer Rights Directive, retailers have the right to cover the cost of processing electronic payments. But neither the directives nor the NTA offered guidance on what a reasonable charge would be, until the spring of this year, when customer service replies began to refer to 50c as the “usual” fee which shops were entitled to charge.
A formula reply used in February and March by support agents read: “Shops are entitled to charge a reasonable fee for use of a credit/debit card to pay for the top up to cover off banking charges (50c for example is considered ‘reasonable’).”
Neither the NTA nor Payzone would say how much shops earn on Leap Card sales. Some retailers say that it’s 1 percent of the value of the credit sold, while others have put the figure at 2.5 percent.
The average top-up, according to figures released by the NTA, is €14.67. The commission on that might range from €0.15 to €0.37. If the customer pays with a debit card and the agent has to pay a €0.35 fee on that debit-card transaction, what’s left is either nothing, or not much.
Hence the 50c charge, which, incidentally, is less than the average discount on a Leap Card fare for a single journey.
Small but Fighty
So that was all about fees on Leap Card top-ups paid for with debit cards. But then there’s cash.
In the past 12 months, the NTA has fielded scores of complaints about shops charging fees on top-ups paid for in cash. Customers often reported prickly or even hostile reactions when they questioned these surcharges.
A support agent wrote in August: “Employee was very rude and mean and wasn’t nice to the customer.”
A customer wrote in May: “I refused to pay the 50 cents and reminded the shopkeeper that as a ticket agent he already gets paid commission . . . after about 10 minutes of arguing the shopkeeper relented and gave me my credit.”
Most shopkeepers are a little more sanguine.
A manager at the shop in the Liberties which got a formal warning over cash surcharges earlier this year said it is now selling Leap Card credit again.
The shop no longer charges a fee on cash top-ups, and has adopted a pragmatic approach for card payments, he said.
“It costs us 35c if we someone pays by card,” he said. “We have an ATM. We say to use the ATM, but if they insist, we charge the [card] fee.”
This is a common workaround for shops which want to avoid transaction charges.
It’s a fairly satisfactory one for customers too, but it flies in the face of the official logic on going cashless. Central Bank of Ireland research says the cost of banking cash is actually greater than the fees for electronic payments.
Fixing the System
Government policy, here and in Brussels, is to persuade Irish people to replace cash with plastic. Convenience is the selling point: advertising for contactless cards shows frazzled spenders, hands full with children or pints, make the problem of paying go away with one suave wave of the hand.
Ireland uses far more cash for payments than most of the rest of the Eurozone, and measures aimed at shifting more Irish retail transactions onto cards in the last budget should do away with the justification for the “usual” 50c.
When the fee for card payments was the 35c quoted by retailers, there was a strong argument for charging 50c when the fixed costs are taken into account.
But when the budget measures come into effect on December 9, the maximum a shop can be charged by a bank on a debit card transaction will be 0.1 percent of the transaction value – a tenth of the reported Leap commission.
If the shops want to, they could pass on this savings to customers and eliminate the friction caused by the standard 50c surcharge.
Further in the future, there might be an even cleaner solution.
The NTA says it is monitoring developments in London, where commuters can use contactless bank cards in place of the Leap-like Oyster Card system.