While the technology that gave us “Tap And Go” has no doubt changed our spending habits, can using paypass affect owning a home? The answer isn’t that simple.
In 2021, just about all new credit or debit cards will be issued with either Visa payWave or MasterCard PayPass. Also known as “Tap And Go”, it was designed as a simple way of purchasing items under $100 in person. Users can either tap or hover their credit card up to four centimetres away from the EFTPOS terminal, and the transaction is processed without a pin or a signature. Many retailers have embraced this payment method as a means to cut down on processing times and cash handling.
Visa payWave and MasterCard PayPass credit cards allow you to “tap and go” due to the embedded near-field communication (NFC) chip, which transmits your information to the POS terminal. There is also a radio antenna embedded into the credit card that sends radio frequencies, allowing contactless payments. However, many of us tend to get over excited about new technology and haven’t been paying attention to how much it’s actually costing us.
Why Paypass Costs More Than Other Transactions
Contactless card payments (like payWave or payPass) cost businesses a lot of money. The Australian Retailers Association estimates banks charge businesses around $500 million every year to process card transactions.
Fees for tap-and-go are about four times higher than EFTPOS and add about 40¢ to a $100 transaction for a retailer or merchant, as the transaction fees treat “Tap And Go” purchases like a credit card, as opposed to a debit card. Businesses then pass on the extra costs to consumers either through by increasing the cost of goods across the store, or via surcharges.
Some major merchants like Coles and Woolworths simply absorbed the cost of processing into their business, but others like Aldi and Westfield Car Parks charged anywhere from 0.5% – 2.5% on credit transactions – including contactless “Tap And Go” payments. Many users simply don’t realise that this method incurs the surcharges that apply to credit cards, and as a result often pay more on their transactions simply because they don’t know any better.
Can Paypass Affect Owning A Home?
Many new and existing users of this modern form of payment have been left wondering – can paypass affect owning a home? Well, the answer is both yes and no. While Paypass itself isn’t the reason why home loans can get knocked back, it’s what you’re using Paypass for that can be linked to a declined mortgage application.
The spending habits of potential borrowers indicate to banks and lending providers what type of lifestyle you lead. Once upon a time, lenders previously assessed a borrower’s capacity to meet a mortgage based on a general household income equation. However, these days they are now looking at up to six months’ worth of bank, transaction and credit card statements – including every single “Tap And Go” purchase you make. It is a near forensic examination of your spending habits, particularly if you use this payment method for lots of regular, erratic purchases. Yes, that includes your weekly UberEats delivery.
So, can Paypass effect owning a home? No, so long as you use it wisely. The magic lies in your mindset. Start living as if you already have a mortgage, and a property to pay for – that means budgets, curbing frivolous spending, and being able to show that you’re a good candidate for a loan to lending providers.
Sourcing Help With Mortgage Solutions
If you are ready to “level up” and get financially fit, then it’s never too early to seek professional financial advice. Whether your next goal is to retire early, take a gap year or purchase a home, George Samios and the team at Madd Life are ready and waiting.
With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. However, after working with a broad variety of clients in regards to their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.