The real issue: the cost of doing business
If your business does not currently charge card surcharges, there may be little visible change for your customers.
However, if you have been surcharging to cover the cost of card payments, you will need to decide how your business will recover those costs from October.
1. Absorb the cost
This may be manageable if card fees represent a very small proportion of your revenue or if lower payment-processing costs offset some of the impact.
But “we’ll just absorb it” should be a calculated commercial decision, not something that quietly happens while everyone is busy doing their actual job.
Even a seemingly modest cost can become significant at scale. A 1% unrecovered card cost on $2 million of card sales is $20,000 per year. That is not loose change hiding behind the EFTPOS terminal.
2. Build the cost into your advertised prices
Businesses can incorporate payment costs into their overall pricing rather than charging customers a separate fee at checkout. This is likely to be the most practical approach for many businesses, but it should be based on actual numbers.
Before changing prices, consider:
- What percentage of customers pay by card?
- What is your true average card acceptance cost?
- How much of the cost may be reduced by the new interchange caps?
- Should the increase apply across all products or only selected lines?
- How price-sensitive are your customers on certain items?
A blanket price rise may be simple, but it is not always the best answer. The goal is to recover the cost without accidentally overpricing your most competitive products or underpricing your least profitable ones.
3. Review your product and service mix
The surcharge change may expose products, services or customer arrangements that were already operating on very slim margins.
This is a good opportunity to examine:
- Minimum order values
- Low-margin product lines
- Fixed-price service packages
- Subscription and recurring billing arrangements
- High-volume, low-value transactions
- Contracts where prices cannot be changed immediately
Instead of adding the same percentage to everything, you may be better off adjusting selected prices, redesigning packages or removing offers that no longer make commercial sense. This process can be part of your annual pricing review.
4. Reduce the cost itself
Businesses should also review whether they are getting a competitive deal from their payment provider.
The new reporting requirements should make it easier to compare merchant fees, but you can start by reviewing:
- Your current merchant statements
- Fixed monthly and terminal fees
- Transaction fees
- Domestic versus international card costs
- Consumer versus commercial card costs
- Whether your current pricing plan suits your transaction volume and mix
Businesses may also be able to offer customers a genuine discount for using a lower-cost payment method, provided the full price is displayed first and the arrangement complies with applicable pricing rules.
