Still charging a minimum purchase amount for EFTPOS? It’s time to reconsider your EFTPOS fee.
Does your business still decree a minimum purchase amount to customers for the privilege of being able to use EFTPOS? It’s really time to stop with that.
We all hate paying an EFTPOS fee, right?
Don’t be fooled; it’s not just the banks who are touching us up over these fees. Small retail, hospitality and service businesses are also charging very high fees (as a percentage) for ‘less than minimum transaction’ amounts.
I was recently levied $0.50 on a $9.50 transaction to use my EFTPOS card because it was ‘less than the minimum $10 spend’. I’m sure you’ve experienced something similar in your travels and really, this has to stop.
Don’t get me wrong, I’m all for small business making money, but this sort of thing is outdated and missing the mark.
"Don't be fooled; it's not just the banks who are touching us up over EFTPOS fees."
The whole idea behind the eftpos fee for small transactions is not a cost recovery exercise. It’s supposed to be an opportunity to suggest a customer increase their total spend, to avoid the eftpos fee.
A kind of incentive to spend a little more.
Big fuel retailers do this by offering you chocolate bars and the like when you pay for your fuel. ‘If you spend another $10 in store you save 4 cents per litre off your fuel!’ Most of us don’t do the math on this though, and many people will jump at the seemingly large fuel discount. What they don’t realise is that, for the average tank of petrol at around 50 to 60 litres, they’re only saving $2 to $3 in exchange for their $10 spend!
The strategy is a successful one for the fuel retailer as they increase the average spend by their customers and customers feel good because they perceive they received a discount.
The problem with the previous example of the cafe where I stopped for coffee and cake is that, as a percentage, they actually slugged me more than 5% fee for the privilege of using my cashcard.
Not once was I offered the opportunity to increase my purchase by a small amount.
Nobody suggested I get a mug of coffee instead of a standard cup (which would have only been 80 cents more and thus avoided the 50 cent fee), or a bottle of water (it was a hot day) or even a small chocolate bar for the road (I was on my motorbike).
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If you’re doing this in your business, please stop it. Today.
Not only are you missing the point of the strategy but you’re also running the risk of upsetting customers and, worse still, having them go elsewhere.
I happen to stop at this same cafe every week on my ride down from Toowoomba to the Sunshine Coast to see my daughter and visit some clients. It’s a nice little break in the middle of a three-hour ride, and I relish the coffee early in the morning before my day really kicks off. There happens to be another cafe in the same town with reasonable coffee, and I worked out they don’t charge me extra to pay by card for purchases under $10.
Guess where I now stop every week?
It’s 2016 and people can now pay with their mobile phone. Very few of us carry cash and using the good old fantastic plastic is part of our modern lives. To penalise me for shopping with you and spending less than some arbitrary minimum is archaic and counterproductive. If you need to recover the fees charged by the banks for merchant facilities, put your prices up.
Seriously, for a typical small business turning over around $300,000 per year and paying roughly $1,000 per month in merchant fees, you’d need to increase your prices across the board by a measly one-third of 1 percent to recoup those costs.
Which do you think a customer would notice the most? Paying an extra 1 to 2 cents for a coffee or paying a 50 cent surcharge because they spent less than the $10 minimum?
Do the math and don’t get caught in the race to recover costs. Instead, remember what customers will pay for – value, service and experience. Use that to your advantage and everybody wins.
Now, if only we could get this message across to the banks …