How can merchants save money with credit card surcharging?

Knowing your options, the pros and cons.

Card payment surcharging has recently been a topic of debate in the business world, and merchants often find themselves at a crossroads when it comes to passing the payment processing fees to their customers.

But why should a merchant consider surcharging and what are the positive and negative implications?

Accepting card payments, including credit and debit cards, incur fees for merchants, cutting into profit margins. According to research by the Reserve Bank of Australia (RBA), electronic payment methods, particularly credit cards, are on the rise and have been for years. The rise in digital payments over recent years is well documented, in 2022, three quarters of all card-present payments were made with cards, and only 13% of payments were made with cash.

With credit card transactions being more expensive for merchants than debit cards or cash, this trend underscores the importance for merchants to decide whether to surcharge their customers.

One notable advantage of surcharging is its potential to offset the costs associated with processing electronic payments, improving profit margins and cash flow, meaning a potential increase in a merchant’s market competitiveness.

This helps manage operational costs and promotes fairness by ensuring that those who benefit from the convenience of using credit cards bear a proportionate share of the associated expenses.

However, it’s important to acknowledge the potential drawbacks associated with surcharging. From a customer perspective, surcharges may lead to dissatisfaction or resentment, especially if they perceive it as an additional fee imposed unfairly, especially on large or high-value transactions.

What are the responsibilities when surcharging?

Are there consumer protections?

Consumers are protected from businesses excessively surcharging through the RBA’s surcharging standard which states that “merchants can only pass on what it costs them to accept each type of card transactions”. Surcharging more than your Cost of Acceptance may constitute ‘excessive surcharging’ and can be investigated by the Australian Competition and Consumer Commission (ACCC).

By transparently communicating the reason behind surcharges and offering alternative payment methods without surcharges, merchants can mitigate customer dissatisfaction and maintain trust.

While surcharging presents opportunities for merchants to recoup processing costs and incentivise cost-effective payment methods, it also requires careful navigation to avoid alienating customers and violating regulations.

By understanding the nuances of surcharging and adopting a strategic approach supported by industry expertise, merchants can harness its potential to enhance profitability and sustainability in the long term.

What options do merchants have to reduce costs?

Partnering with payment solution providers like PayNuts can offer merchants insights and strategies to implement surcharging responsibility.

Various methods are available to merchants trying to mitigate their operating costs with a payment provider.

PayNuts Pay Nothing EFTPOS allows merchants to pass on transaction fees to customers as a surcharge. PayNuts Low Fee EFTPOS will enable merchants to lower their expenses with a tailored pricing plan specific to their business.

PayNuts is a payment provider that offers a range of the latest terminals and services to suit businesses. With same-day funding available, 24/7 customer support and a dedicated merchant portal for single-source reporting. Pay nothing or peanuts for payments, nuts not to.