Here’s why Canberra small businesses are rethinking the cost of taking card payments. This is a sponsored post.

Walk into almost any café, takeaway shop, salon, or retail store around Canberra, and you’ll notice something pretty quickly. The overwhelming majority of people aren’t paying with cash. Instead, they are using their mobile wallets or debit cards.

While that might be quick and convenient for customers, for small businesses, each of those taps comes at a cost.

In fact, for years, many owners have simply accepted card payment fees as part of running their operation. But now, with operating costs climbing across the board, many Canberra businesses are starting to rethink the impact of accepting cards. 

Specifically, they are looking more closely at how much they’re actually paying every month in associated fees. And, more importantly, whether it is actually worth it.

Let’s explore this in more detail.

Why are card payment costs becoming a bigger problem?

Running a small business in Canberra is arguably more expensive than it has ever been. Rents have skyrocketed. Wages are higher. Profit margins are smaller. And suppliers are charging extra for stock and deliveries.

On top of that, businesses have to pay card processing fees almost every time a customer makes a purchase. At first glance, those fees might not look huge. But when you add them up across hundreds or even thousands of transactions each month, then the numbers start getting quite serious.

That’s why more owners are questioning whether they’re getting good value from their payment provider.

How much are merchant fees costing?

Many business owners don’t have a clear understanding of what EFTPOS is, let alone how merchant fees work. That’s why they can be very surprised at how quickly the fees can add up.

Based on Reserve Bank of Australia (RBA) data, small businesses often pay higher rates, typically between 0.85% and 2% for debit cards and 1% and 2% for credit transactions, than bigger businesses. Different providers charge different rates, and the costs can vary depending on factors like:

• Whether someone uses debit or credit
• Contactless payments
• Online purchases
• International cards
• Monthly terminal fees

Why are more customers choosing contactless payments?

Australians have become very comfortable with contactless payments to the point that most now expect businesses to accept cards, phones, smartwatches, and digital wallets. In fact, over 40% of Aussies claim to leave their wallets at home when they go out.

Gen Z and Millennials, in particular, prefer tapping over using notes and coins. Mainly because it’s faster, easier and aligns with how they shop today. While this is good for them, it presents a problem for Canberra businesses who are considering refusing card payments. Not least because doing this is likely to send customers elsewhere.

What’s included in the cost of card payments?

A lot of people assume that businesses only pay a single, small transaction fee whenever a customer taps their card. But in reality, the costs are often more layered than that.

For instance, some businesses may also pay for:

• EFTPOS machine rental
• Monthly account fees
• Software subscriptions
• Online payment gateways
• Internet-connected terminals
• Support or maintenance services

Additionally, if a business sells both online and in-store, costs can increase further. That’s understandably why many operators are now searching for the cheapest card payment systems they can find.

Do EFTPOS surcharges turn customers away?

You’ve probably noticed surcharges becoming more common when you visit your local cafe or nail salon. This is because many businesses are countering merchant fees by passing them on to customers. 

Primarily, they are doing this by adding a small fee at checkout on top of the price of goods to recover their payment processing costs. However, others are absorbing the cost themselves because they are worried about negative customer reactions.

While it’s true that surcharges might put some customers off, the businesses that are least affected by churn seem to be those that explain their reasoning for doing so. Most Australians are happy to support small businesses where they can. So, it pays to try to tap into this loyalty.

How can EFTPOS and transaction costs be reduced?

Probably the best way to reduce your EFTPOS and transaction costs is to shop around for a better deal. Previously, many businesses might have just stuck with their provider and written it off as an essential cost. But now, there is definitely a greater willingness among many business owners to look elsewhere.

Indeed, many are:

• Comparing payment providers yearly
• Negotiating lower rates
• Switching to bundled systems
• Reviewing old contracts
• Encouraging debit card payments instead of credit cards

Others are even paying more attention to the actual EFTPOS machine they use. For example, the best EFTPOS machine for a cafe may not suit a mobile tradie or a clothing boutique. Indeed, different businesses process payments differently, so the right setup will depend heavily on customer behaviour and the volume of transactions your business processes.

What to know about modern EFTPOS systems

Many business owners are not aware of the full functionality of modern EFTPOS systems. In fact, many now do much more than simply process payments by also offering:

• Sales tracking
• Online ordering
• Inventory management
• Digital receipts
• Customer reporting

That’s why some business owners are becoming more interested in how EFTPOS payments work in Australia, rather than just accepting whichever machine a provider first recommends. 

While they might cost more, newer systems are easier to integrate with accounting software and online stores, saving businesses significant time during busy periods. And as they say, time is money.

More businesses are moving towards cashless payments

Despite the fees associated with them, a growing number of venues across Canberra are moving towards cashless-only payments.

For businesses, there are a few practical reasons behind doing so. To start with, handling less cash means fewer bank runs and a lower risk to staff of theft. Additionally, card or mobile wallet transactions are often much quicker, too.

That said, not everyone loves the idea. Many customers, particularly older Australians, still prefer using cash. There’s also the issue of outages and what happens if payment systems go down, which can quickly leave fully cashless businesses in serious trouble.

Still, many owners believe Australia is steadily heading towards a mostly cashless economy, whether businesses like it or not. So, on that basis, they want to get a head start early.

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