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.
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 at www.merchantpricing.com for full access.
If you have a larger business and need help in selecting a service provider, then please get in contact with one of our consultants - http://www.paymentsconsulting.com/our-team - and make sure to mention this article.
Author: Mangala Martinus, Managing Director, Payments Consulting Network, Sydney
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