The Hidden Costs of “Zero Cost” EFTPOS

Fee-free EFTPOS can be confusing for both you and your customers if you don’t select the right service provider for your needs. More importantly, it can be damaging for your business reputation if you don’t understand how it all works — or your responsibilities as a merchant, if you choose to surcharge customers.

Let’s look at the facts about who’s paying the fees when using fee-free EFTPOS, and what it means for your business.

How can I reduce my EFTPOS fees?

There are a couple of ways you can reduce your EFTPOS fees.

1. Choose an EFTPOS provider with a low, flat processing rate.
2. Purchase your EFTPOS terminal outright. Renting tends to cost more in the long run.
3. Carefully read your merchant statement and identify any hidden charges or ongoing fees (e.g. monthly accept keeping fees).
4. Pass on the cost of processing an electronic transaction to the customer via a surcharge.

If you choose to use Zeller’s surcharging functionality, you have the option to pass on a percentage of your cost of acceptance or the cost in full. If you choose to pass the full transaction fee on to the customer, your business is getting fee-free EFTPOS — because there are no hidden fees or charges with Zeller. Purchase your Zeller Terminal outright, and there is no more to pay.

Now you have some ideas about how to reduce your EFTPOS fees, let’s explore what you need to be aware of when looking at “fee-free” EFTPOS options.

What fee-free EFTPOS really means

When a cashless transaction is processed, there is a cost for using technology to move funds from the customer’s account to your business’ — quickly and securely. Transaction fees are a necessary cost of modern-day business.

Terms such as “fee-free EFTPOS” and “zero cost EFTPOS” simply mean that the cost of the transaction is passed on to the customer as a small surcharge, added to the sales total. Essentially, instead of your business incurring the cost of the transaction, your customer covers it at the time of payment.

When you read:

• Fee-free EFTPOS it means the processing fee is passed on to your customer as a surcharge.
• Zero cost EFTPOS it means the cost to your business is zero, because it is passed on to your customer as a surcharge.

These things are technically the same as an automatic surcharge, which means the cost of accepting a transaction is automatically passed on to your customer as a surcharge.

Protecting your business

Fee-free EFTPOS can be confusing for both you and your customers if you don’t select the right service provider for your needs. More importantly, it can be damaging for your business reputation if you don’t understand how it all works — or your responsibilities as a merchant, if you choose to surcharge customers.

Here are some things to think about.

“Fee-free” isn’t always free

If a business isn’t paying transaction fees, then its customers are. However, there are other fees a business may be paying unknowingly.

Understanding the fees associated with EFTPOS transactions can be confusing. This is because every payment services provider sets its own charge rates, and some EFTPOS services come with hidden fees, charges and transaction limits. Depending on your provider, your transaction fee may vary according to the card or payment method being used, the type of transaction, or volume of payments your business processes each month. Other charges may include authorisation charges, installation or maintenance fees, and terminal rental fees. To learn more about EFTPOS transaction fees, read our article on decipheringtransaction fees.

Zeller Terminal is yours to keep when you purchase a Zeller Kit. There are no hidden charges or terminal rental fees to worry about. A simple, flat transaction fee of 1.4% applies to all in-person purchases.

You’re often locked in to a contract

Most fee-free and zero cost EFTPOS plans lock you in, often for a one-off fee. 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.

At Zeller, we believe business owners should have the flexibility to toggle surcharging on or off with ease — as and when it suits their business. It should be as simple as flicking a switch.

Legally, your customers need to know

Transparency is important. No one likes hidden fees — and that includes your customers.

As a merchant, if you choose to surcharge your customers, you have a legal obligation to display appropriate signage. That signage must be placed in an area where customers are likely to see it. The rules are clear: customers should know that they are paying an additional fee to process the transaction digitally. That way, they have the option to use another method if they wish.

Each state has its own relevant laws to comply with. The onus is on every business owner to familiarise themselves with what’s required.

Introducing a surcharge to your business doesn’t have to be a headache, providing you have the right payment solution and are aware of your legal responsibilities. Zeller makes it easy to cover your cost of acceptance with automated surcharging.

How to pass your transaction fees on to customers with Zeller

First, you should familiarise yourself with the rules that are there to protect consumers from excessive surcharging by businesses.

In a nutshell, the rules laid out by the Reserve Bank of Australia stipulate three key responsibilities when adding a surcharge to your transactions.

1. You cannot pass on a charge greater than the one you incur.
2. You must review your surcharge at least once a year.
3. You must display appropriate signage about the surcharge.

We’ve simplified the process of surcharging for our merchants. No matter how your customer chooses to pay, a low, flat transaction fee of 1.4% applies to every in-person transaction — taking the guesswork out of calculating surcharges. You can then toggle surcharging on, via Zeller Terminal or Zeller Dashboard. It’s the simplest way to ensure you’re recouping the full cost of transactions, while meeting your merchant obligations.

Zeller also makes it easy for you to have complete control of what costs you pass on to your customer, without being locked into a long term arrangement. Simply log in to your Zeller Dashboard to toggle surcharging on or off at your convenience, or set a new custom surcharge. For more information about how surcharging works with Zeller, read Smarter Surcharging: Apply a Custom Surcharge with Zeller Terminal.