7 Ways to Lower Your Merchant Fees

What are merchant services?

Merchant services are financial services and products for businesses. The term typically refers to EFTPOS terminals 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.