• EFTPOS & Point of Sale Solutions

Smarter Surcharging: Apply a Custom Surcharge

6 min. read03.12.2021
By Team Zeller

Discover how to pass on your cost of acceptance with Zeller.

In Australia, businesses are legally entitled to charge customers a fee for processing an electronic transaction. This fee is called a surcharge.

The purpose of this fee is to cover the costs associated with accepting the customer’s chosen payment method — yet some merchants choose to absorb this cost themselves. Zeller Terminal makes it simple to pass on your entire transaction fee, or a percentage of your transaction fee, with the toggle of a switch. When you surcharge the transaction fee in full, your business is getting zero cost EFTPOS.

Keep reading to discover more about credit card surcharges, the legalities around passing on your cost of acceptance, and how to set your EFTPOS surcharge on Zeller Terminal.

What is a surcharge?

Different payment methods have varying costs and benefits to both businesses and their customers.

A surcharge is an extra charge you can pass onto your customers who choose to pay with a credit or debit card, or smart device. Every time your business processes a cashless transaction with an EFTPOS terminal, you are charged a small fee to cover the checks and balances that must occur in order to safely move funds from a customer’s bank account into your own.

Zeller makes it easy for you to pass that cost — either in its entirety or in part — onto your customers as a surcharge. Having the ability to set a custom surcharge means you can choose what suits your business, and your customers.

Why businesses surcharge their customers

The prices that merchants set for their goods and services incorporate the general costs of running the business — such as rent and electricity, among other things. Yet an important distinction between other business costs and the costs associated with transactions is that it is the customer that chooses the method of payment, which then determines the cost of the transaction.

Cards are the most frequently used method of payment in Australia. As cash use continues to decline, the more electronic transactions your business processes. You will need to make fewer trips to the bank to deposit your takings, spend less time counting cash drawers, and benefit from the increased security that solutions such as Zeller Terminal offers. For more information about the shift away from cash and how this impacts your business, read our blog: Why Accepting Credit Cards is Critical for Business.

It typically costs just a few cents to process an electronic transaction. However, many merchants look for ways to grow their business. For some businesses, passing on transaction fees via surcharging is a way to achieve this.

The downside of surcharging

Surcharging is relatively common in Australia — you’ve undoubtedly paid a surcharge as a consumer, whether at your local coffee shop, hairdresser, or high street store. Businesses of all shapes and sizes choose to pass on their cost of acceptance this way. Yet, for some customers, surcharging can be a turn-off that impacts their likelihood to return to your business and purchase again. It may even impact their perception of your business.

Research from Finder shows the majority of Australians don’t believe they should be charged for choosing to pay with a card or smart device. Now that cash payments are becoming less and less common, the practice of charging an additional fee for card payments has even been called “redundant”.

Should your business surcharge customers?

In determining whether or not to utilise the Zeller surcharging functionality to recoup your cost of acceptance from customers, consider:

  1. the customer perception of surcharging.

  2. how common (or uncommon) surcharging is in your specific industry.

  3. whether your nearby competitors impose a surcharge.

Surcharging is more commonly accepted in some industries than others. For example, 23% of Zeller merchants who run retail stores surcharge their customers, compared to just 2% of those who operate a beauty salon — which indicates that consumers are likely accustomed to paying a surcharge when tapping their card to pay for a new shirt, but less accustomed to paying a surcharge for a manicure. On the other hand, 12.7% of Zeller merchants who run a bar, restaurant, cafe, or other hospitality business surcharge customers.

It’s also important to pay attention to what your competitors are doing — especially if you run a business that is reliant on a steady stream of local customers, such as a coffee shop. If locals know they can purchase their daily cup of coffee from a competitor across the street without paying a surcharge, you may risk losing their business.

Ultimately, the decision of whether or not to surcharge is yours alone; no one knows your customers better than you. If you decide not to toggle on surcharging, either in full or in part, you could look for other ways to reduce your business expenses — such as by increasing the price of your products or services.

Zeller Terminal makes it as simple as possible for those who wish to surcharge their customers to recoup their cost of acceptance, either in full or in part. Keep reading to discover how much you can surcharge, and how to set up your Zeller Terminal for surcharging.

Surcharging rules in Australia

The Competition and Consumer Amendment (Payment Surcharges) Act 2016 prohibits businesses from charging customers an “excessive” surcharge. However, there is no set rule regarding what is deemed an excessive charge.

Legally, businesses are entitled to recoup the cost of accepting a customer’s method of payment — no more. The Reserve Bank of Australia outlines the costs that can be covered in a surcharge, including:

  • Merchant service fees

  • Terminal rental fees

  • Costs to maintain a credit card terminal

  • Other fees including switching fees, fraud-related chargeback fees, and more.

How much can Zeller merchants surcharge?

In setting your surcharge, it’s important to remember that Zeller Terminal is yours to own outright. That means businesses that use Zeller do not incur terminal rental fees.

Transactions processed through Zeller Terminal, where the customer and their card are both present, typically cost 1.4% of the total transaction amount. Card-not-present transactions (whether over the phone or via post) typically cost 1.7%, to reflect the increased security measures required to verify the transaction.

The maximum surcharge you can set is equal to your transaction fee.

How to set your surcharge with Zeller

Setting your custom surcharge takes just a few moments, and can be done via Zeller Dashboard or Zeller Terminal. Simply follow the steps below, and every transaction processed through Zeller Terminal will have a surcharge applied automatically.

Setting your surcharge on Zeller Dashboard

Surcharging functionality can be accessed via the Payments settings for each individual Zeller Terminal.

Follow the below steps to set your surcharge on Zeller Dashboard for in-person payments.

  1. Expand the Payments menu and then click Sites.

  2. Select the Site you would like to manage.

  3. Click the Payments tab at the top of the screen.

Surcharging-feature

From here, you can either:

  1. Toggle on Surcharge my total fees, or Surcharge a percentage and enter a custom card surcharge that is no more than 1.4%, or

  2. Click Save to confirm your changes.

Electing to pass on your total fees means you will recoup your costs for the full transaction amount, including any tips, every time.

create-custom-surcharge-for-eftpos

As MOTO transactions incur a higher fee, you need to toggle on surcharging for card-not-present payments separately. The maximum surcharge you can set for MOTO transactions is 1.7%.

Surchaging-MOTO-options

Setting your surcharge on Zeller Terminal

Setting and updating your surcharge on Zeller Terminal is just as simple — however, you must be logged in as an Account Administrator. This is to protect your business from staff accidentally toggling surcharging on or off.

eftpos-terminal-surcharge-customise-on-screen

For more information about surcharging with Zeller Terminal, visit the Support Centre.

Providing Zeller merchants with the ability to pass on transaction fees in full or in part is just one way Zeller supports merchants to run their business the way that suits them.

Zero Cost EFTPOS: How Does It Work and What’s the Catch?

You might have heard about ‘zero-cost’, ‘fee-free’, and ‘no-pay’ EFTPOS: as their names suggest, they offer business owners a way to accept payments without the regular transaction fees. Before you sign up, it’s important to understand how these schemes work and whether or not they’re right for your business. Fee-free EFTPOS explained. When someone makes a cashless transaction – by tapping their card or mobile device to your EFTPOS terminal – there is a cost for using the technology that moves the money from their account to your business bank account. This cost is known as a ‘transaction fee’ or ‘merchant fee’. A way for businesses to avoid having to pay this fee is to pass it on to the customer as a small surcharge that is added to the sales total. So, instead of your business incurring the cost of the transaction, your customer covers it at the time of payment. This is referred to as ‘surcharging’. Fee-free EFTPOS  means the processing fee is passed on to your customer as a surcharge. Zero-cost EFTPOS  means the cost to your business is zero, because it is passed on to your customer as a surcharge. This process is sometimes also referred to as an “automatic surcharge”, which means the cost of accepting a transaction is automatically passed on to your customer. Is surcharging legal? Yes. In Australia, it is legal to pass on the transaction fee, however, the Reserve Bank of Australia (RBA) mandates that the surcharge rate can’t be higher than the amount you incur to process card transactions (your ‘cost of acceptance’). Read our blog article to learn more about  how surcharging works in Australia  and in what states and industries it is most popular. It is important to note that if you do choose to pass on the fee to your customers, you are legally obliged to display appropriate  surcharge signage  at the point of sale. When ‘fee-free’ isn’t actually free. While the promise of ‘free’ EFTPOS processing is enticing, it’s important to make sure you fully understand the terms of your contract with your payment provider before proceeding. Many fee-free or zero-cost EFTPOS plans do indeed have additional costs and obligations, which we’ve listed below: Machine rental  – Most payment providers will charge a monthly fee for the EFTPOS hardware required to take payments. If your business requires multiple machines, this cost can quickly add up. Upfront establishment fee  – When you get started with EFTPOS, you may be charged a one-off establishment fee that covers the setting up of your payment terminal. It is usually charged per facility, so if you have more than one EFTPOS machine , you will be charged for each. Lock-in contracts  – This means you cannot remove the surcharge without help from your financial services provider, which will likely involve lodging a formal request and then waiting for it to be actioned. Minimum monthly transaction volume  – Many payment providers will only honour their ‘fee-free’ promise when you meet a minimum transaction volume, which can be upwards of $10,000 processed through your EFTPOS terminal per month. Variable fees per card type  – As a merchant, you have a responsibility to ensure your surcharge remains less than – or equal to – your cost of acceptance. However, some payment providers will charge a variable transaction fee, (one that changes depending on the card type) which makes it very difficult to predict what an appropriate surcharge will be. In order to stay within the law, you will have to surcharge an amount that, in some instances, won’t entirely cover the cost of the fee. When signing up for a zero-cost EFTPOS provider, make sure you’re asking questions to uncover the hidden charges and obligations — to ensure you’re getting the best deal for your business, and for your customers, too. To learn more about the true cost of EFTPOS, read our article on deciphering transaction fees . Zero-cost EFTPOS made simple with Zeller. At Zeller, we pride ourselves on keeping our fees simple and transparent. When you use Zero-Cost EFTPOS with Zeller Terminal, you know exactly how much (and how little) you’re paying. Purchase your EFTPOS machine outright  – Zeller Terminal is yours to own for just $99. With no monthly rental fees, this makes it the most affordable EFTPOS machine on the market. Order one online from the  Zeller Shop  and enjoy free express shipping. Turn surcharging on and off at any time  – We understand that surcharging doesn’t always sit well with the customers who have to foot the bill, which is why we have built flexible surcharging into our technology. With Zeller Terminal, you can toggle surcharging on or off with ease. What’s more, you can also customise the surcharge if you would prefer to only pass on a portion of the transaction fee. One low, flat fee  – No matter what card your customer chooses to pay with, Zeller will only ever charge one low, flat transaction fee of 1.4% to every in-person transaction — taking the guesswork out of calculating surcharges. No monthly minimum requirements  – At Zeller, we do not discriminate: our offer remains the same for all businesses. Whether you process $5 or $50,000 in a month, you will always have access to zero-cost EFTPOS. No hidden fees and no lock-in contracts  – With Zeller, what you see is what you get. Purchase Zeller Terminal outright and pay (or surcharge) 1.4% per in-person transaction. There are no additional fees, and we’ll never lock you into a contract.

Free Surcharge Signage Template

If you’re surcharging in Australia, you need to notify your customers about it. In this article, you'll learn what the legal requirements are around surcharge signs, as well as accepting card-only payments and weekend and holiday surcharges. Plus, download our printable EFTPOS surcharge sign template for free. So, you’ve decided to start surcharging. To ensure you are being fully transparent with your customers as well as meeting regulatory requirements, there are certain rules around surcharge signage that you must comply with. Being aware of these as soon as you start surcharging will not only help you avoid potential disputes but, importantly, maintain good faith among your clientele. Not sure about passing the transaction fee onto your customer? This handy guide will help you decide whether surcharging is right for your business. What are the legal requirements around EFTPOS surcharge signs? Surcharging in Australia is governed by the Australian Competition & Consumer Commission (ACCC), which mandates very strict requirements around how much a business can legally surcharge ( read their guide on calculating surcharges here ). According to the ACCC , the rules around surcharge signs are as follows: If your business accepts alternative, non-surcharged payment methods (such as cash or bank transfer), then you are only legally required to have an EFTPOS surcharge sign visible at the counter. There are no specifications around how this sign must be formatted, however it must sufficiently communicate to your customers what they will be paying before they tap, dip, or swipe their card or mobile wallet. If your bank or payment provider charges a different fee per card type, then you need to specify exactly how much will be surcharged for each card. But don’t worry, we’ve done the work for you: download our****credit card surcharge sign template below, add your transaction fees, print it out and display it at your counter. If your business does not accept any payment methods that don’t incur a surcharge, then you must include the surcharge within the price of the product. For example, a $5 coffee with a 2% surcharge added to it will need to be displayed at all times as $5.10. In this instance, it is not sufficient to display the coffee as $5 on the menu and to only have a credit card surcharge sign at the point of payment. Is it legal for businesses to not accept cash? Yes, according to the Reserve Bank of Australia , there is no legal requirement for merchants to accept cash for retail payments. It is the decision of the merchant as to whether they accept or encourage payments in cash. However, the ACCC states that consumers must be made aware of these terms and conditions before they make a purchase and the total minimum price payable for the goods or services must be clearly stated (as per the example above). If you choose to stop accepting cash, make sure to update all your pricing displays to incorporate the surcharge amount into the individual prices, and ensure you have a clear and conspicuous sign detailing the payment methods you do accept. Are weekend and public holiday surcharges legal in Australia? Yes. The ACCC allows cafes and restaurants to add a surcharge on weekends and public holidays to help cover the increased costs of penalty rates during these periods. However, it’s imperative that you effectively communicate this to your customers. The ACCC mandates that the venue include the following words on the menu and/or price display: “ A surcharge of [percentage] applies on [day or days].” Additionally, the words must be at least as prominent as the most prominent price on the menu, or made visible elsewhere in your venue. How much should you surcharge on public holidays? Unlike credit card surcharges, there is no limit to the amount a business can set as a public holiday surcharge. However, the standard rate in Australia is between 10% – 15%. It is up to you as a business to assess whether you risk potential customer dissatisfaction to ensure your operational costs are covered, or whether you absorb the public holiday penalty rates with the knowledge that it might bring in more customers. The rule of thumb when it comes to surcharge signage While the ACCC doesn’t specifically detail exactly how large or visible your surcharge signs should be, they can investigate cases of non-compliance. If a customer considers that your business is breaking the rules around pricing displays, at best they won’t return to your business, but at worst, they will report you to the ACCC. It is therefore extremely important that you do not mislead your customers about what they’ll be charged or why. Ensure you have a clear, visible surcharge sign at your counter, so that consumers can easily see whether there are any additional costs that may apply before making their decision. Additionally, opt for an EFTPOS machine , such as Zeller Terminal, which calculates the surcharge and displays it clearly for the customer on-screen before they tap their card.

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