Understanding Merchant Fees in Australia

Discover some simple ways to reduce your credit card processing fees. Merchant services fees are unavoidable. These days, more and more customers prefer to pay with a card or digital wallet. It’s simply more convenient than coins and notes. However, there are a few ways you can reduce the fees you pay to accept cashless transactions, and keep more money in your business. Keep reading to discover more about these costs, as well as seven ways to save money on merchant fees so you can focus on improving your margins, reinvesting in your business, and scaling your operations. What are merchant services? Merchant services are financial services and products for businesses. The term typically refers to EFTPOS machines and the technology required to process digital transactions. When a customer taps their card or digital wallet to your EFTPOS terminal, a number of things have to happen for the funds to move securely from their account into your business’.  Multiple security checks happen in milliseconds to ensure the customer has the required amount of funds available in their account for spending, and cardholder data must be encrypted. That process incurs a fee, called a processing fee. Your cost of acceptance (the amount of money it costs your business to accept cashless payments) accounts for a very small proportion of business costs. However, some merchant services providers also charge monthly fees, authorisation costs, terminal rental fees, and more. These costs add up, and eat into your profits. How to reduce the cost to your business The only way to avoid merchant fees altogether is to refuse cashless payments, and operate as a cash-only business. This is a drastic measure that will cost you customers in the long run. Your customers no longer carry cash, and sending them to the nearest ATM is likely to result in a lost sale. However, there are some ways to reduce merchant fees without sacrificing revenue or losing customers. 1. Understand your fees If you don’t know what you’re paying, you can’t possibly know if you’re paying too much — or identify opportunities to cut your costs and save money. Worse still, merchants who don’t understand their fees could be paying expensive fees unknowingly. Some common costs you could be paying include: establishment fees. Some providers will charge you just to get set up with an EFTPOS terminal. Each individual terminal may incur an additional fee. installation fees . Older terminal models may require a merchant services representative to visit your business for manual installation. monthly account keeping fees.  You could be up for administrative charges every month, just to use your account. terminal rental charges. If you do not purchase your terminal outright, you will be paying a rental fee for each EFTPOS terminal. minimum service fees. Your provider may impose a minimum monthly transaction amount which you must meet, or pay a fee. statement fees. You may be charged for the printing and mailing of your monthly merchant services statements. cash out fee. You may be charged a flat fee or percentage of the transaction to process a customer’s cash-out request. The first thing you need to do is carefully read your merchant statement and identify your true costs. You can’t cut costs if you don’t know what they are. Zeller fees are simple and straightforward: pay just 1.4% per tapped, dipped or swiped transaction. There are no hidden fees or charges. Purchase Zeller Terminal outright, and get set up in minutes. Zeller has been designed for busy, growing businesses, with a simple, easy-to-use design so that you can begin selling as soon as possible. Put dollars back on your bottom line and take the hassle out of trying to find out what exactly you’re paying for, and why. 2. Switch to zero cost EFTPOS Another way to cut business costs is to pass the cost of processing an electronic transaction on to the customer via a surcharge. That way, the customer pays for the cost of the transaction — and your business gets a fee-free EFTPOS solution . Surcharging is common practice in Australia, and customers are used to paying an additional couple of cents for the convenience of using their card. With Zeller, you can toggle surcharging on or off as you please. You have the option to surcharge customers the full cost of the transaction, or a percentage — it’s up to you. 3. Avoid long-term contracts Long contracts lock you into a merchant services facility for months or even years. If your merchant services provider doesn’t do a good job at supporting your business, or chooses not to develop their systems in line with the latest technology, you are still legally obligated to continue paying for the service. Plus, costs for ending a contract early can be steep. What seems like a good deal at the time can quickly become an anchor, tying you into a merchant services facility that costs your business dearly in the long run. Flexible contracts, or no contracts at all, are the way to go. Not only does this give you a competitive edge — by making it possible for you to change providers when it suits your business — but it ensures your provider has to work hard to keep you as a merchant customer. And you’ll never be up for early cancellation fees. When you sign up for Zeller, there are no lock-in contracts or commitments. We know you’ll love our solution enough to never want to leave. 4. Stay PCI compliant PCI stands for Payment Card Industry. As a merchant, there are security standards you must abide by to protect both your customers and your business. In a nutshell, these standards require you to store your customer’s data securely. There are a number of things you must do, such as: encrypt the transmission of cardholder data across open, public networks. track and monitor access to cardholder data. maintain a firewall configuration to protect cardholder data. The fees and fines for not complying with PCI standards are costly — not to mention the cost to your business, and customers, that flow from a security breach. When you accept payments via Zeller Terminal, Zeller takes care of your PCI compliance. It’s just another way our team of security experts helps keep your business safe. 5. Set a minimum card spend Some merchants choose to impose a minimum card spend, forcing customers that make a purchase under a set amount to pay with cash. Customers who aren’t carrying physical money (i.e. the vast majority) have two options: add additional, unwanted items to their purchase so that the minimum card spend is met. abandon the purchase. This is an obviously frustrating experience for customers, and one that could cost your business a customer for life. For this reason, while it is one way to minimise your transaction costs, it is not recommended. 6. Minimise chargebacks Sometimes, a customer may dispute a payment and seek to have the funds returned to their account. This is called a chargeback . When this occurs, the customer’s bank will contact your business for proof that the product or service in question was provided. If adequate proof cannot be provided, the bank will reverse the charge. On top of that, your business may have to pay a chargeback processing fee. Chargebacks are expensive. Thankfully, there are ways you can minimise the likelihood of them occurring, such as documenting evidence of each transaction you process. This documentation can include clear, itemised receipts, signed proof of delivery, a photo of your products in their postal packaging, and more. You can also minimise the risk of chargebacks by partnering with a secure payment processor with in-built fraud and chargeback prevention measures, like Zeller. 7. Find the best merchant services provider for your business Choosing a merchant services facility is one of the most important business decisions you can make. The provider you choose will impact how quickly you receive your funds, your profit margin, the transparency of your incomings and outgoings, and more. Consequently, the impact of choosing incorrectly will be felt across multiple points of your business. EFTPOS terminals used to be basic machines that merely facilitated the movement of money from a customers’ account to your own. Since then, technology has advanced. Your chosen payments partner should enable your business to grow by: enabling you to accept every payment from every customer processing cashless transactions in seconds giving you fast access to your funds allowing you to track transactions in real-time empowering you with transaction data you can use to make important business decisions If your merchant services provider isn’t doing those things for your business, it’s time to shop around for a better option. Zeller is built to give merchants better insight into the financial side of their business. It’s more than just a payments system. With Zeller as your payments partner, you get access to Zeller Transaction Account, Zeller Mastercard and Zeller Dashboard, so you can process sales, spend your takings and track your incomings and outgoings with ease. To learn more about how Zeller can help your business grow, contact Zeller Sales today.

Understanding how much accepting card payments really costs your business. Let's be real: the vast majority of your customers are paying on card these days. Yet when it comes to EFTPOS transaction fees and associated costs charged by banks, there’s been little evolution. The Reserve Bank of Australia’s Consumer Payments Survey  suggests that as of 2022, cash payments represented just 16 percent of in-person transactions, continuing the downward trend that has been underway for nearly two decades. Despite the transformation of the payments landscape on the side of the customer, banks have made minimal effort to assist business owners in adapting to this evolving environment. The lack of flexibility on the part of the big four has made fertile ground for tech-forward payment solutions such as Zeller that are heralding a revolution in business banking — without the banks. Read on for a transparent breakdown of what fees are involved with traditional EFTPOS plans, and how Zeller Terminal could be a smarter alternative for when your business needs to accept card payments. What is an EFTPOS transaction fee? An EFTPOS transaction fee refers to the amount a business is required to pay whenever it processes a card payment with an EFTPOS terminal. With most traditional providers, the fee you pay will vary depending on what type of card a customer uses and will usually be charged as a percentage of the transaction value. Transaction fees, however, are just half of the picture. There can be plenty of other costs associated with EFTPOS, and it pays to understand these before you get started. Kirsten and Malcolm are just some of the thousands of business owners who have cottoned on to the fact that, by virtue of the increased volume of card users, the banks’ EFTPOS transaction fees and costs have become extortionate, despite there being no material improvement in the service provided. Whether you’re planning for your new business or are shopping for a better deal, it’s important to understand the terminology, and how the fees are calculated so you don’t get caught out later. The four factors to consider when calculating your EFTPOS costs 1. Establishment and Setup Establishment fee When you get started with EFTPOS, banks typically charge 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. At Zeller, the only upfront cost you'll incur is the price of the Terminal, aside from that, it’s free to get started. What’s more, when you sign up, you’ll immediately receive a free Zeller Transaction Account which you can choose to settle your funds into and use to keep track of your business cash flow. You can also order a free Zeller Debit Card to manage your business expenses. Monthly service/plan fee Depending on the bank and the pricing plan you establish, you will also likely have to pay a monthly service/plan fee. This fee is charged to cover the costs of providing your payment service. At Zeller there is no monthly service fee. POS integration fee If you would like to integrate your EFTPOS terminal to your point-of-sale, the banks will typically charge you a one-time fee. At Zeller, integrating your POS and your terminal is easy and you can do it yourself – for free. Of course, if you have any issues, our support team is always here to help, at no cost. 2. EFTPOS Transaction Fees Minimum merchant service fee If your total sales fall below a certain amount, banks will typically charge you a monthly fee per EFTPOS machine. At Zeller, we pride ourselves on our transparent pricing. There are no minimum sales requirements, so even if you don’t start using your Zeller Terminal straight away, you won’t be charged until you make your first sale. Interchange & scheme fees When a customer uses a credit or debit card to make a purchase, a number of fees are charged between your bank, your customer's bank and the payment card network (eg. Visa, Mastercard, or American Express). Without getting into the weeds, (you can learn how EFTPOS transactions work here ), the important thing to understand is that the transaction fee you pay your bank, is entirely dependent on the type of card your customer uses, and it could be anywhere between 0.2% and 3.5%. While Zeller also incurs the same variable interchange and scheme fees as the banks do, we simply charge you one fixed amount, no matter what card a customer uses. Every payment that is tapped, dipped or swiped on a Zeller Terminal (including payments using an American Express card) costs just 1.4%. If the payment is made over the phone, the transaction costs 1.7%. Not only does this make reading your merchant statement much less of a headache, but more importantly, it allows you to more precisely forecast your EFTPOS transaction fees. This means more accurate budgeting, and ultimately, healthier cash flow for your business. What’s more, having a simple flat fee makes it much easier to calculate a surcharge for zero-cost EFTPOS (more on this below). Return or refund fees When you need to refund your customer, the banks may charge a flat fee per refund transaction processed where a credit or debit card has been used. The fee is typically based on the volume of refunds processed. Zeller does not charge a return or refund fee. Chargeback fees A chargeback is a transaction reversal initiated by a cardholder through their bank or credit card issuer. It allows the cardholder to dispute a transaction and request a refund of the funds. If this happens, the bank will charge you a processing fee for investigating and resolving the dispute. With Zeller, you will not be charged if a customer successfully disputes a chargeback. 3. EFTPOS Hardware Monthly terminal fee When you sign up to EFTPOS with a bank, they provide you with the machines under a rental agreement, you do not own them outright. You will therefore be charged a monthly fee to cover the rent of your EFTPOS terminal(s). The fee varies depending on the type and quantity of terminals you use. Zeller EFTPOS Terminal costs $259 and is available to buy outright. Aside from the accessories and stationary mentioned below, there are no additional costs associated with the hardware. Equipment not returned/damaged fee Given that bank-issued EFTPOS terminals remain the property of the bank, if these are not returned or become damaged due to negligence or misuse, you will be charged a fee. Paper rolls and accessories For any additional accessories you request, such as terminal stands, EFTPOS cables or paper rolls; a cost is incurred. Note that many bank-provided EFTPOS machines do not have digital receipt capability, so it’s important to take the cost of paper rolls into consideration. The beauty of Zeller Terminal, is that you can choose to SMS or email customers their receipts — removing the need for printer paper, and further reducing your costs. 4. Surcharging In Australia, it is legal to pass the cost of your EFTPOS transaction fees onto your customer. This process of surcharging is referred to as 'zero-cost EFTPOS'. While it's gaining widespread popularity among business owners, it's important you understand how it works, because charging more than what you pay in transaction fees can get your business into trouble. With a bank-provided EFTPOS machine, surcharging requires the merchant to calculate their own surcharge rate. Legally, the rate needs to be set at the average acceptance cost of the lowest card system . For instance, your surcharge fee might need to be set at 1% — even if the bank charges you 2.6% to accept American Express cards. It’s important to take this seriously as the Australian Competition and Consumer Commission (ACCC) may take action against any merchant whose card surcharge exceeds its ‘cost of acceptance’ (that is, the amount it costs you to accept a payment from a particular type of card). Having a complicated fee schedule makes it very difficult to work out the correct rate to surcharge at, especially if you are running a new business with no history of EFTPOS transactions to base your decision off. Thanks to Zeller’s flat rate applied to all cards, surcharging is simple. Business owners have the flexibility to toggle surcharging on or off — as and when it suits their business — and to choose to pass on the entire EFTPOS transaction fee, or just a fraction. With surcharging enabled, your Zeller Terminal will automatically apply a surcharge to every transaction total, no calculation required. Read our blog to find out whether surcharging is right for your business . The way people are paying has evolved, so it’s time your EFTPOS process did too. When figuring out what EFTPOS terminal is right for your business, it’s important not to simplify the decision down to transaction fees alone. The bank charges associated with setting up the service, connecting your POS, renting the terminal and paying for additional fees for refunds or receipt rolls can end up costing you much more than you think in the long run. Additionally, complex transaction fees that vary depending on each customer’s card makes surcharging a complicated, and stressful, experience. The way people are paying has evolved, so it’s time your EFTPOS process did too. Join the thousands of Australian businesses simplifying their transactions and saving money with Zeller.

Card processing fees are costs paid by merchants on credit and debit card sales. In most instances, card processing fees cover things like interchange fees, scheme or network fees, chargebacks and other charges related to accepting credit and debit card payments quickly and securely. Most people who don’t run their own business rarely think about credit card processing fees. When it comes time to pay for things, they just tap, insert, or swipe their card and assume the money will leave their bank account and go straight into the merchant's – but it’s definitely not that simple. In reality, when a cardholder uses their debit or credit card to make a payment, a huge number of microtransactions and computations take place between varying financial institutions. This complicated cascade of transactions includes processes for authorising, clearing, and settlement between the financial institution processing the card transaction on behalf of the merchant and the financial institution that provided the card to the cardholder, across card payment networks. Below we’ll cover the basics of card processing fees to help you understand a bit more about what goes on behind the scenes. What are credit and debit card processing fees? Whenever a customer makes a card payment, a series of financial institutions work to instantly and securely process the transaction. This process incurs fees to the various parties, including: • Interchange fees: These are typically set by the operators of card payment networks or card schemes, such as EFTPOS, American Express, JCB, Visa or Mastercard. They can vary based on factors like the type of card, and whether it’s an online or in-person transaction. The variable nature of these fees makes for a lack of predictability, and merchants who opt for ‘cost plus’ pricing are subject to card processing fees that vary month by month based upon the types of cards that come across the counter. At Zeller, interchange fees are included in the low, flat rates we offer as part of our service. • Scheme or network fees: Also charged by the card networks, scheme fees are added on top of interchange fees and cover the cost of maintaining card payment infrastructure operations. At Zeller, we also include scheme fees in our flat-rate transaction fees. • Chargeback fees: In rare events where a customer disputes a transaction on their card, chargeback fees are sometimes imposed on merchants to cover the costs associated with managing the chargeback process. Zeller does not impose any additional fees to manage the chargeback process, regardless of the outcome for merchants. • Additional or hidden fees: Some payment providers charge a flat fee per transaction in addition to percentage-based fees, as well as monthly fees, contract termination fees, terminal rental fees, and account setup fees. Zeller does not charge any of these additional fees. Instead, we make it simple for merchants to sign up for and access our services at any time, without the need to be handcuffed into long-term contracts or worry about punitive exit fees. • Merchant services fees: A fee charged by the payment provider for processing each card transaction in the form of a fixed amount, percentage-based fee, or a combination of both. In Zeller’s case, that fee is a flat 1.4% for card-present transactions across all supported card networks, including American Express, and it covers all the costs mentioned above. This means we take care of everything from interchange fees to chargeback resolution for our merchants, and it’s all covered by our industry-leading fees. How are card fees calculated? Card processing fees are typically calculated as a percentage of the transaction amount, and some providers may charge you an additional fixed fee per transaction. The final cost can depend on several factors, including: • The type of card used: For example, cards which grant cardholders additional benefits like points or rewards may have a higher interchange fee, which is then passed on to the merchant at the point of purchase. • Card origin: Whether the transaction is being processed with a domestically or internationally issued card. • The payment method: In-person transactions using card tap or chip generally have lower fees than manual card entry or online payments. With Zeller, you never have to worry about complicated fee structures, because we've kept it simple, predictable and affordable. Learn more about Zeller’s industry-leading card processing fees here . Payment processing pricing models Understanding your payment provider’s pricing structure can help you estimate and manage costs. In Australia, the various pricing models include: • Flat-rate pricing: A single fixed percentage fee applies to relevant transaction types, making your card processing costs predictable. This is the pricing model Zeller uses, and it's very popular in Australia for the simplicity, affordability, and ease of understanding it offers both merchants and customers. • Cost plus pricing: The interchange fee is passed through, with an additional margin from the payment provider charged on top. This results in unpredictable card processing fees for merchants. • Tiered pricing: Transactions are grouped into categories, each with different fees. This model can be complex and less transparent. How to minimise your credit and debit card processing fees. While card processing fees are a necessary cost of doing business, there are ways to reduce their impact: • Choose the right payment provider for your business: Thoroughly compare payment providers, focusing on fees, pricing structures, and value-added services. At Zeller, we’re known for our transparent, flat-rate pricing of 1.4% per card-present transaction, including for American Express. • Negotiate your merchant fees: Depending on transaction volume, some providers may offer better rates. At Zeller, merchants who process over $250K annually in card payments can speak with our team about the potential for a custom rate. • Consider if surcharging is right for your business: In Australia, merchants can choose to legally pass on the cost of card processing to customers, provided the surcharge reflects the actual processing cost. To surcharge, merchants must clearly display the surcharge amount at the point of sale. Learn more about surcharging here . • Proactively reduce chargebacks to minimise fees: Chargebacks can result in additional fees and lost revenue. Implementing fraud prevention measures, such as verifying customer identity and using secure payment technologies, helps to avoid these fees. Learn more about chargebacks and how to prevent them here . See how Zeller compares. While credit and card processing fees are an inevitable part of accepting payments, understanding how they work can help you make more informed decisions and manage your costs effectively. By choosing the right provider and negotiating your fees based on your card processing volume, you can help ensure your business is operating efficiently while providing your customers with convenient payment options.