Deciphering EFTPOS Transaction Fees

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29.10.2021 Payments Finances

Deciphering EFTPOS Transaction Fees

Can you cut costs by minimising your transaction fees?

As a business owner, you know that every cost — no matter how small — adds up. When was the last time you looked at your EFTPOS transaction fees and worked out what your merchant service deal means for your bottom dollar? Whether you’re a solo entrepreneur, small business owner, franchisee, or growing your enterprise, there are multiple options available. 

When it comes to setting up your EFTPOS terminal, merchant service deals and offers from banks and their competitors can be complicated and difficult to understand — but it pays to read the fine print. EFTPOS terminals often come with complex fee schedules that impact your business’s revenue. 

Higher transaction fees mean less money for your business, restricting growth and hemorrhaging revenue that could otherwise be spent on marketing and other growth strategies. On the other hand, cash presents issues of its own — with security concerns, time spent counting drawers, and the delay in deposits. Not to mention the fact that we are moving towards a cashless society, where less and less customers are opting to pay with cash.  As cash payments decrease, EFTPOS transactions increase. The ability to decipher your EFTPOS fees and select the payment system with the lowest, most easily understandable translation fee is an integral part to growing a successful business. 

Keep reading to find out what transaction fees you may be paying, and their impact on your business’s revenue.

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What are transaction fees?

Let’s break down what EFTPOS transaction fees are, and how they impact your business. Simply put, if you accept payments via an EFTPOS terminal you will incur a fee. However, there are complexities in transaction fee charges, as different forms of payments (such as debit, credit, AfterPay, and the like) typically incur different transaction fees. This can confuse business owners in estimating their transaction fees for any given period, and makes merchant statements all the more perplexing to understand. 

What business owners also need to be aware of is that EFTPOS vendors — like the four big banks — set their own fee schedules, and most don’t make it easy to understand what the charges are for. With rental fees, transaction fees, and several other fees to consider, the total cost of merchant service deals can be hard to comprehend. 

Here is the breakdown of the fees you may be charged for using an EFTPOS terminal.

  • Monthly plan fee: this can sometimes be listed as an EFTPOS terminal rental fee, which typically starts at around $30 (however can jump as high as three figures, depending on the vendor). 
  • EFTPOS transaction fees: these can be a set figure or can be charged to the business on a per-transaction basis. What’s even more difficult to understand, is that a fair few EFTPOS vendors add a percentage-based cost to a standard charge.
  • Additional payment fees: these are charged to cover the additional cost of security measures to protect over-the-phone payments. Some merchant services providers also charge additional fees for every AMEX transaction.
  • Extra terminal fees: if you need extra EFTPOS terminals, you will be up for additional fees — including terminal rental fees, if you don’t own the terminal outright. 
  • Printing costs: you’ll need to purchase ink and receipt rolls to keep your machine in working condition. 

Add all these fees up and the cost of running your EFTPOS terminal can be pricey. Some merchants even have a minimum EFTPOS transaction spend advertised in their business for this reason.

Keep in mind that some fees, such as monthly accounting keeping fees and terminal rental costs, can easily be avoided by choosing a provider such as Zeller. Zeller Terminal is yours to own outright for a one-off payment of $299, and every payment that is tapped, dipped or swiped (including payments using an AMEX card) costs just 1.4%. Plus, you can choose to SMS or email customers their receipts — removing the need for printer paper. Every cost cut saves you money that can now be spent growing your business.

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Who pays for card transactions?

Interchange fees are not paid to Visa, MasterCard, or other card schemes by the merchants. This is done through your bank, using the transaction fees that have been charged to your business. 

What most customers or shoppers don’t realise is that the merchant can charge a fee to cover the cost of accepting EFTPOS transactions. The surcharge amount is up to the merchant; however, the merchant is not supposed to profit from surcharging customers on card transactions.

How to avoid EFTPOS transaction fees

Every business owner wants to minimise costs in order to maximise their profits. As a merchant, it’s up to you to do decide whether you will absorb the costs associated with your EFTPOS transaction fees — or whether you will pass them on to your customers. Before deciding, it’s crucial to understand what surcharging is, and the legalities around it.  

The important thing to note is that, yes, you can add a surcharge to a transaction. However, you cannot charge more than what you pay in transaction fees; if you have a complicated transaction fee schedule, it can be impossible to work out. You may need to choose to pay a fixed percentage amount that covers all cards used. Be wary of this, as choosing too low a percentage will shortchange your business. If you choose this option, the transaction fee limit rate needs to be set at the average acceptance cost of the lowest card system. For instance, your surcharge fee might legally need to be set at 1% — even if your services provider charges you 2.6% to accept AMEX cards.  Under Australian Consumer Law, you cannot set your surcharge to the average cost of all the individual card types. 

And herein lies the conundrum. If you’re a new business, how do you decide what percentage to charge if you have no history of EFTPOS transactions to base your decision off? If you’re an existing business, how do you uncomplicate this process to work out the correct surcharge to pass on? When you’re ready to save money on fees, how do you identify the optimal surcharge to cover your transaction fees?  

These days, there is an alternative to the big four banks; a modern-day solution to simplify your EFTPOS transaction fees and streamline your payment system. Zeller’s low, flat rate of 1.4% for all tapped, dipped and swiped transactions keeps costs as low as possible for your business — while providing you with the certainty you need to pass on the full cost to customers via a surcharge. Surcharging can be toggled on and off whenever suits your business. Plus, Zeller Dashboard allows you to forecast your monthly charges, budget, and track your sales.

Simplifying and saving on EFTPOS transaction fees is an important part of generating more revenue for your business. Keep in mind, under Australian Consumer Law provisions, if you’re passing on a surcharge, you’ll need to be transparent about it to your customers. And if you’re charging a flat rate of 1.4%, most customers likely won’t mind the extra few cents.