Merchant services guides and resources

In-Store Payments....

Least-Cost Routing

We’ve done some homework to help you understand least-cost routing, the benefits, considerations and list of service providers offering the service in Australia.

Download our free PDF to find out more.

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How to select an EFTPOS provider: Essential criteria a small business should consider

With almost twenty banks and payments service providers to choose from, selecting an eftpos provider for a small business like a retailer or café can be difficult. 

This month we have listed the top four criteria a small business should consider when selecting a new EFTPOS service provider for in-store payments:

1. Card Acceptance

Generally, Visa, Mastercard and eftpos cards are now accepted as standard by all providers. Most service providers will also accept American Express and Union Pay cards, but often separate fee arrangements apply. Watch out for exclusions and inclusions within the standard fees as the likes of Commonwealth Bank (American Express and Union Pay) and Square (American Express) do include additional cards as part of the standard fee schedule, but most do not. Other payment types which may be relevant to your organisation but which are not accepted by all providers include Alipay (accepted by Tyro, NAB and Smartpay), Diners Club and JCB cards.

2. Fees and Transaction Volumes

Most providers have tiered fee structures based on monthly turnover. The higher the monthly turnover, then the lower the cost per transaction.

Nearly all service providers will provide customised quotes once a business averages more than $30,000 in monthly turnover, so if your business fits into this category it is always worth asking for a quote rather than just looking at the standard pricing presented on a website.

Be careful when comparing plans which include a certain volume of transactions within a fixed monthly fee (e.g. most major banks) to those that charge a fixed monthly fee per terminal and separate transaction fees (e.g. Bendigo Bank). While merchant plans that include transactions within the flat monthly fee may look simple, you may also be paying more per transaction if you do not reach the monthly turnover threshold each month.

It really is important to consider which card types are included in the standard fees and where additional fees may apply. Some service providers also treat credit cards and debit cards (i.e. those taking funds from a savings or cheque account) differently, with credit cards charged as a percentage of value, and debit cards sometimes charged as a fixed fee per transaction. Not all service providers make this distinction, so watch out for this when comparing fee structures. 

When customers tap, these transactions are typically routed via the international card schemes (e.g. Visa and Mastercard). Service providers such as Tyro allow merchants to implement “least-cost routing” which enables a merchant to direct these contactless transactions to the lowest cost provider, which for debit cards may be the domestic eftpos scheme.

Terminal fees are also factored in differently with some plans including the cost of the first terminal in the monthly fee, some having a separate monthly terminal fee, while others (e.g. Square) charge an upfront fee for the terminal but no monthly fees.

Other fees which tend to differ between service providers include establishment fees, lost/damaged terminal fees, cancellation fees and monthly account fees if settling funds into another bank’s account. 

3. Connectivity and reliability

How the terminal connects to your service provider may not sound important until you first start having connection issues when trying to accept payments, so make sure you understand beforehand what will work best for your business.

Most terminals targeted at small businesses will connect via a mobile network. Mobile network coverage can vary considerably, particularly if your payment terminal is located at the back of a shop or café. Hence, find out which mobile network is used by your preferred provider and check to ensure that you get strong mobile reception where your payment terminal will reside. If the terminal supports Wi-Fi, consider whether this is a better option as the primary means of connection or can serve as a backup.

If you run a Point-of-Sale (POS) system, then also check whether your preferred service provider is able to provide a terminal that integrates with this. Square even provides a free POS application.

Reliability or the up-time of your service provider can sometimes be an issue and if your business relies heavily on accepting electronic payments, then this becomes an important factor. Check with other business owners and social media to find out whether there have been any up-time issues. Many service providers also provide low cost mobile card readers (e.g. with a small up-front fee or monthly fee), so you may want to consider having one of these on-hand with another service provider to use if your primary service provider goes down for any reason.

4. Design

Check out whether the terminal utilised by your preferred service provider fits easily on your counter-top and works aesthetically for your type of business.

Some businesses, e.g. cafes and restaurants, may also find it useful to accept payment at the table, so check out how easily this can be done with the terminal.

How easy the interface is to use is also important. This is sometimes difficult to check beforehand, but you can ask other businesses who use the same terminal or check out the terminal user guide which the service provider can provide (some even make this available on their websites).

Finally, make sure the terminal supports all the functionality you require, e.g. tipping, automatic surcharge calculations, split bills, email receipts.

Comparing service providers (particularly card acceptance, functionality and pricing) can be a difficult task for a small business, particularly when time is limited. This is where the Merchant Pricing Hub can make life easier with our service provider comparison tool and pricing calculator. Just sign up for an annual membership for full access.

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Online Payments....

Choosing a Payment Gateway? Here are the Three Questions you Need to Ask

With seamless payment solutions a must have for businesses the world over, companies need to ask the right questions when selecting a vendor.

Getting the right gateway for the life cycle of your business could be the cornerstone for your success, getting it wrong could cost you.

The one size fits all phenomenon vendors peddled five years ago has since been replaced with adapted solutions at a fraction of the cost. Gateways are now providing region specific solutions creating an improved cardholder experience as standard.

With this in mind, here are the top 3 questions you need to ask when selecting a vendor

1.   Show me the money

Payment gateways will sometimes just offer the connectivity and will require you to seek out your own merchant account.  Some will provide a single solution where the merchant account is included as part of the sign up.

A merchant account will determine when your money will be in your bank account. When and how often your money will settle can impact your cash flow.

Understanding how the payment gateway and its merchant account will work is key. Some of the global carts will require you to use their merchant account and if you don’t it will hit you with additional fees. It is important to know how chargebacks work, if goods or services are not received the cardholder can raise a dispute.

The key piece of information to understand is ‘how long from when the customer makes that payment do I receive it?’ This can be on a scale from approximately one day up to seven days. Just because the transaction is real time does not mean you will have your funds immediately. There is a lot of back end bank settlement required to be processed and in some cases money is held for monetary gain.

2.   What countries do you service - really?

Despite all the talk, there is no single vendor who can serve a global market. This is contrary to the well-executed marketing campaigns of the global giants. In many cases, each country has its own preferred payment method like ACH in the US for bills, Bpay for bills in Australia and Sofort in Germany all being supported by ‘in country’ players.

Often some of the global players may not be providing customer support during your high-volume times. Getting a payment gateway which aligns to your region’s time zone and preferred method of payment is paramount.

Also, knowing which countries are factored into your expansion horizon are key. Processing costs can be lower if you are set up with a player in that country however if your volume is low it may be best for these customers to use your existing gateway in another currency even at slightly higher rate. If your gateway suits 90% of your transactions 90% of the time, you can service the majority of your customers so this could be the best route.

3.   What integrations do they offer?

Having a smorgasbord of integrations on tap will enable your business to grow without the need to change suppliers. Working with a payment gateway that integrates with your industry software may be a prudent approach.

Fraud tools vary widely in cost and complexity. Depending on your operation you will be considered high or low risk. Partnering with a gateway who has a solution which meets your business profile is important. There is no point spending a few dollars per transaction preventing fraud if that is swallowing your margin. In contrast, if you are in an industry where fraud is apparent this investment would be essential.

As much as it is important to integrate with your internal practises, this cannot be done at the expense of the customer experience.

Some organisations use different payment vendors for different client experiences. This can be due to usage and size of payment.

If you are starting the process of looking for a payment gateway provider knowing the supplier supports all channels and can fit in with your everyday processing is key.

With PCI compliance and data security a hygiene factor for payment gateway providers, it is time to look deeper at the total experience in the region you operate.

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6 Benefits of Using Multiple Payment Service Providers

Many merchants choose a single Payment Service Provider (PSP) and then find themselves at a disadvantage if they can’t dynamically keep up with changing customer preferences, e.g. supporting additional currencies and new payment methods. 

The reality is that there are many compelling reasons to work with more than one PSP:

1. International sales - to accept local currencies and payment methods in different countries. This may entail going with PSPs the primarily service specific markets.

2. Cost reduction - to route transactions to the lowest cost PSP. Different PSPs charge a range of prices for specific payment methods and transaction types. With two or three PSPs, it is possible to choose the lowest cost PSP for each payment type. This can also be the case for international sales where PSPs in specific markets may have better pricing than a global PSP. Single providers can be convenient by may lead to increased overall costs.

3. Independence - to avoid being locked in and mitigate the risk of fee increases. If the merchant has only one PSP then there is a risk of becoming ‘locked in’ with a potentially high cost to change PSPs (or add another) later. In this situation there is a possibility that the incumbent provider may gradually increase transaction fees over time until the merchant feels some real pain on their margins. Having at least two PSPs mitigates this risk and is likely to keep fees lower over time.

4. Contingency - as a backup if the primary PSP goes down for a period. 

5. Customer preference - to ensure a customer’s preferred payment methods can be offered. A merchant may lose sales if it does not accept the preferred payment method of the customer. It may be necessary to work with multiple PSPs to be able to accept all the payment types customers wish to use.

6. Omni-channel - to ensure a set of payment methods can be consistently accepted both online and in-store. It may be necessary to use more than one PSP in order to consistently accept a set of payment methods both online and in-store.

Click here to read our full news post on this topic.

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Surcharging and Cost of Acceptance....

Surcharging and Cost of Acceptance

The Reserve Bank of Australia (RBA) has established changes to card payments regulations banning excessive payment surcharges and providing new powers for the Australian Competition and Consumer Commission (ACCC).

This new standard affects the amount that merchants can surcharge for card transactions. The standard applies to all business/merchants that impose payment surcharges on payment transactions regardless of their size.  

If a business chooses to impose a surcharge on its customers for making a payment using a credit, debit or prepaid card, the level of the surcharge must not be excessive. 

A payment surcharge is considered excessive if it exceeds the cost of acceptance.

You do not have to impose payment surcharges on accepted payment methods. If you do not impose any payment surcharges on your customers, the ban will have no impact on you.

The full ACCC Guidelines can be viewed online.

What payments are affected?

The new law covers surcharges on typical card payment methods:

  • Eftpos (debit and prepaid)
  • MasterCard (credit, debit and prepaid)
  • Visa (credit, debit and prepaid), and
  • American Express companion cards (issued through an Australian financial service provider, rather than directly through American Express).

What costs can be included when working out a surcharge?

If you choose to impose a payment surcharge on a payment method covered by the ban, the amount of the surcharge must not exceed your cost of acceptance for that payment method.

Your costs of acceptance are provided to you on a statement from your bank (acquirer) or payment services providertypically shown as a percentage figure amount.

For most businesses, the fees include:

  • merchant service fees
  • fees paid for the rental and maintenance of payment card terminals
  • any other fees incurred in processing card transactions, including cross-border transaction fees, switching fees, and fraud related chargeback fees (but not the cost of any actual chargebacks).

You can also choose to pass on additional permissible costs, but you are required to calculate the permitted surcharge yourself.

Additional permissible costs paid to other providers are:

  • gateway fees paid to a payment service provider
  • the cost of fraud prevention services paid to an external provider
  • any fees paid for the rental or maintenance of card terminals paid to a provider other than your bank or payment facilitator
  • the cost of insuring against forward delivery risk.

These must be able to be verified by contracts, statements or invoices.

Businesses cannot include any of their own internal costs when calculating their surcharges (for example, labour or electricity costs).

Calculating your Cost of Acceptance

Source: ACCC

Can I impose a flat fee surcharge?

If your costs of acceptance are charged to you in percentage terms, it will typically be appropriate that any surcharges you impose will also be expressed as percentages.

The ban does not prevent you from imposing a payment surcharge as a flat or fixed fee, however, you will need to ensure that the amount of the surcharge does not exceed your cost of acceptance for any given transaction.

If you wish to impose a single surcharge across multiple payment methods, you must set the surcharge at the level of the lowest cost method - you can’t average across the methods.


If your average cost of acceptance for Visa Debit is 1%, for Visa Credit is 1.5%, and for American Express is 2%, you would only be permitted to charge the same level of surcharge for each payment method if it was 1%, as that is the lowest of all payment methods. You would not be allowed to use an average of the three figures.

What if I don’t comply with the ban?

The ACCC is responsible for enforcing the ban and can take the following actions:

  • issue an infringement notice with penalties of up to $12 600 (body corporate) or $126 000 (listed corporation)
  • take court action seeking pecuniary penalties of up to $1 358 910 per contravention, injunctions and other orders.

More information on surcharging and cost of acceptance

More information is available from your bank, payments service provider or the Reserve Bank of Australia Questions and Answers on Card Payments Regulation.

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