Why you need to be charging for use of EFTPOS facilities in your hospitality business and how to make sure you are doing it right.
Lets face it, our experiences with card facilities when we go to a café, restaurant or bar are extremely varied. From:
- simple refusal if your purchase is under a certain value (usually $10),
- a flat charge for use under a certain amount (again usually $10) and no fee over that amount,
- a per cent of the transaction (2.5 per cent, 5 per cent, 10 per cent),
- no fee at all.
So why the confusion and is any of these methods correct? What is required?
Charging for card facilities has always been a confusing one for hospitality business owners. With so many cards being presented by customers and a wide range of fees charged by our banks. It isn’t easy to charge a fee that doesn’t scare away your customer while also recovering the cost.
Laws introduced in September 2017 imposed fines for businesses that charge a fee any higher than the cost of the transaction. This made it even more important to get it right.
So what are your options?
Option 1 is to charge no fee. Absorb the cost and get on with running your business. We do not recommend this. The fact is customers are now accustomed to having transactions fees passed on. Whether its airline tickets, concert tickets, parking tickets all big business seemed to embraced passing on the fees. As a small business it is critical you do the same.
Option 2 is to use a leverage your merchant facility such as Tyro and recover the fees. Tyro can automatically calculate an acceptable amount to surcharge based on the type of card and the transaction type. It is a one step process and all that is required is that you inform the customer of what the rate of surcharge is and have clear signage stating the various rates for each card type.
Businesses that implement surcharging increased their bottom line profitability instantly.
For other ideas on how you can increase the profitability of your restaurant, café or bar contact Ten X Advisors today.