As we move towards a cashless society, more and more customers want to use credit cards for even the smallest of purchases. It might be convenient for customers, but it's not necessarily convenient for businesses.
Spend money to make money
As soon as customers opt for a card instead of cash, it's costing you money to take their money.
The cost of an EFTPOS machine on your counter just doesn't add up for many small businesses. When you're dealing with a bank to arrange an EFTPOS machine you need to allow a roughly $90 establishment fee, $30 annual fee, $40 monthly rental on the hardware and a $20 minimum monthly merchant fee.
Then you need to allow for transaction fees and/or a few percent of the transaction amount for credit cards. That's quite a lot of fees for a small business to cope with, especially if you'll only be using it for the occasional small transaction.
Use a smartphone instead
Thankfully smartphones are offering a cheaper alternative for small businesses looking to accept credit cards, whether it's over the counter or on the road. Options appearing in Australia include Westpac's Mobile PayWay (also available from St George), PayPal Here and Flexigroup's Paymate OntheGo.
These services rely on a tiny card reader which plugs into the headphone jack on your smartphone. Once you've installed the free software on your phone, your customers can simply swipe their card through the reader.
They can be offered the option to enter their PIN or even sign on the screen, but for security purposes the card details are not stored in the app or on the phone. The software connects to the bank to process the payment and can even email the customer a receipt.
How much am I saving?
The savings come from reduced fees as well as the fact you're no longer paying for the EFTPOS machine. You'll obviously want to read all the fine print before you sign up for anything.
Paymate OntheGo only works with Apple's iPhone.The standard plan has no setup or ongoing fees. You simply pay $19.95 for the card reader and then 2.25 percent plus a 50 cent fee per transaction. Regular, Professional and Business plans include a monthly fee but reduce the percentage you pay.
Meanwhile the PayPal Here adaptor is free and works with iPhone and Android devices, plus you've got the added advantage of accepting PayPal payments as well as credit and debit cards. There are no establishment or ongoing fees, you'll simply pay 30 cents per transaction plus 2.4 percent or 2.9 percent of a credit card transaction. Of course you need to take into account other fees for using the PayPal service as a merchant.
Westpac's Mobile PayWay is still in the pilot program. The iPhone-compatible adaptor is free, but you'll pay 2.75 percent of the total transaction plus a 30 cent transaction fee.