Surcharging: Is it Right for Your Business?


28.07.2021 Payments

Surcharging: Is it Right for Your Business?

Considering adding a surcharge for EFTPOS payments? Read this first.

Every sale you make costs your business a small amount of money. When a customer pays with cash, it costs your business in intangible ways; time and manpower spent opening, counting, and closing drawers, visits to the bank, implementing security measures, and more. On the other hand, when a customer chooses to pay with anything other than cash, your business incurs a fee for processing that transaction.

As we move closer and closer to a cashless society, it pays to know how to keep your transaction fees to a minimum. The easiest way is to choose an EFTPOS provider with straightforward, minimal transaction fees and pass on as much of the cost as possible to the customer. This is called “surcharging”. Yet not every business chooses to impose a surcharge. 

Keep reading to discover if surcharging is right for your business, your responsibilities as a business owner when surcharging, and the legal requirements to surcharge in line with the Reserve Bank of Australia’s requirements.

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Can you charge customers for EFTPOS fees?

The short answer is, yes — you can.

When a customer taps, dips, or swipes their debit or credit card, mobile phone, smartwatch, or NFC-enabled device to your EFTPOS machine, there is a small charge to process that transaction. The money needs to go from the customer’s bank account into yours, and there are a number of checks that have to be carried out before that happens. 

As a business owner, it’s up to you to decide whether to absorb this cost – or pass it onto your customers, whether in full or in part, as a surcharge. If you pass on your full cost of acceptance, you're getting fee-free EFTPOS processing. 

But before you do, ask yourself these questions:

  • Is it common to surcharge in your industry?
  • Do your competitors charge their customers a surcharge?
  • Do your customers tend to pay using cards that incur a high processing fee?
  • Will your customers be less likely to choose your business if you impose a surcharge? 

If you decide the answer to most of the above is no — and you choose not to add a surcharge to the cost of your products or services — you may still be able to reduce your business expenses some other way. For example, you might increase the base prices of your products or services by a small amount.

For many businesses, surcharging is a simple way to keep business expenses at a minimum. If you decide to impose a surcharge, there are a few things to keep in mind. 

Your responsibilities as a merchant

The first rules relating to surcharging were put in place by the Reserve Bank of Australia in the early 2000s. As Australian consumers increasingly made the switch from physical to electronic forms of payment, and rules were required to “support competition and efficiency in the payments system”. 

The latest rules — designed to curb excessive surcharging — came into effect on 1 September 2016 for large merchants, and 1 September 2017 for all other merchants. It’s important to keep abreast of these changes and understand what your responsibilities are as a merchant.

If you decide the benefits of surcharging outweigh the potential to disgruntle customers with a small charge, there are three key things to remember. 

1. Your surcharge cannot exceed your Cost of Acceptance

This simply means you can’t pass on a cost greater than that which you incur. Importantly, different businesses have different costs of acceptance — depending on the mix of cards accepted, as well as the merchant services provider through which the transactions occur.

2. You must review your Cost of Acceptance at least once every year

As a merchant, you have a responsibility to check your level of surcharge once per year. Using your annual statement, as well as any other applicable costs, you must check whether your surcharge remains less than — or equal to — your cost of acceptance, and set your surcharge for the following year based on what you discover.

3. You must display appropriate signage

If you choose to impose a surcharge on customer payments, you are required to publicly display the cards that the surcharge applies to. Your surcharge signage must be clear and in public view, and where relevant should display the percentage or amount of the surcharge. 

Introducing a surcharge that’s fair to both your customers and your business is easy with the right EFTPOS solution. However, as a business owner, it’s ultimately up to you whether you absorb the costs associated with accepting cards and other cashless forms of payment.  

With Zeller Terminal, the cost of acceptance is already low — so simply making the switch could save your business a considerable amount of money in transaction fees. It’s often these small, invisible charges that add up and leave a dent in your cash flow. 

For Zeller merchants who want to pass the cost onto the customer and get fee-free EFTPOS, it’s simple to enable (and disable) surcharging functionality within the Zeller Dashboard. When enabled, Zeller Terminal will apply the appropriate surcharge to the transaction total automatically. 

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