The POS Software Blog

The POS Software Blog

News from Tower Systems about locally made POS software for specialty local retailers.

Advice for local retailers on how to deal with EFTPOS fees


It’s an easy complaint for a retailer to make – my EFTPOS merchant fees are too high, it’s not fair, time for me to consider another supplier or to consider charging customers a surcharge.

Customers hate surcharges, especially if there is another retailer selling what you sell who does not charge a surcharge.

Every method of payment has a cost, including cash. In my experience working with retailers, the cost of cash is higher because of theft. However, it is not easily seen, especially in retail businesses that do not research or teach theft.

Here are some business ideas for addressing the cost of EFTPOS:

  1. Promote cash payment – if you want the costs associated with cash of course.
  2. Be clear as to the cost of using a card. You could apply a surcharge, which I think is a ridiculous idea though.
  3. Price knowing that cards will be used by customers. Build the cost into your pricing model. Keep the bump under 1.5% and it is less likely to be noticed.
  4. Lower a cost elsewhere to cover the cost. Shaving a hour of employee rostered time can save you around $30.00, that’s equal to purchases of $3750.00 on a card – depending on the type of card used.
  5. Increase sales. While you should be focussed on this anyway, increasing sales helps you address the EFTPOS cost and more in the business.

If you are annoyed/upset/angry about EFTPOS fees, I’d like to gently and respectfully suggest you look at parts of your business over which you have control and that offer a better return from your physical and emotional attention. These are things that I regularly see ignored in favour of complaining about someone or something else:

  1. Dead stock. A problem not seen is not a problem to too many. In the average indie retail business, dead stock is equal to at least 3% of turnover.
  2. Stop running out of stock. Manual process for stock reordering, by retailers and suppliers, regularly result in sell-outs, and, therefore, missed sales. Every time that happens it is a cost to the business. In a retail business I looked at recently, the cost of sell-outs was more than $12,000 in a year, or $6,000 in gross profit, all because of poor re-ordering management.
  3. Bloated roster. Some prefer to spend money on people so they have time to themselves for relaxing, golf or to sit in the back office, where no customer purchases from. I often see a bloat cost equal to around 10% of the roster.
  4. Wrong trading hours. Some stay open too long while others are not open long enough. Either way has a cost to the business.
  5. Being blind to theft. Theft in local indie retail costs on average between 3% and 5% of turnover. Not watching for it, tracking it and mitigating against it has a cost to the business.
  6. The wrong product mix. GP% is a key measure of retail business performance. Increasing yours beyond what is traditional for your channel provides you with a buffer. For example, transaction count / sales can decline and you can be okay. Measure GP%. Set a goal. Chase it. The air is cleaner in above average.
  7. Ignorance. No, it’s not bliss. There are insights in your software that can guide better decisions, faster decisions, more financially rewarding decisions. Yet, too many in retail don’t want to know. That failure costs them plenty.

The items on the above list are all on the retailer to address. The benefit is that addressing these results in a stronger, leaner and more valuable retail business.

Adding a surcharge to each EFTPOS transaction is an easy step, but the wrong step in my view as doing that could shield you from more important and valuable business moves you can make.

One of us here at Tower Systems ate at a Melbourne restaurant recently while in the city for the Comedy Festival. The bill was $195.00. They only took payment by card. They presented the EFTPOS terminal. After navigating the tip screen on the EFTPOS terminal a message appeared: If you proceed a surcharge may apply. There was no option but to proceed. The surcharge was $2.14.

What was annoying was that paying by card was the only option and that they control the prices of what they sell.

Maybe we are ignorant about restaurant management but this place could have charged 10% more on each item and not charged a surcharge and customers would be happier than with them now. In fact, customers would probably have been more likely to return than now.

We think EFTPOS fee question is more one about acting on what we can change rather than what we cannot change.

We worry too much about price in local indie retail. A retailers we know selling a range of products widely available increased their price by 10%. Unit sales continued on their upward trajectory. This business now makes more GP from each item sold. The owner does a back of the envelope calculation about the value and tips the additional GP into a bucket, a buffer if you like, for when they see something not going their way.

In the Tower Systems POS software you have facilities for addressing the 7 points listed above. If you’d like help navigating these, please reach out.

We are keen for you to maximise value from your Tower software.

By Mark
The POS Software Blog




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