SMALL businesses are doing it tough, and many local operators say a large percentage of their overall earnings are paid to companies offering point of sale (POS) software and services through credit card, Eftpos and other banking transaction charges.

“In our first year of operation we absorbed transaction fees but that same year the business was robbed, there was constant roadworks (in Princess Street) and we found we paid between $4000 and $6000 to an Eftpos/payments provider,” Daniel Duong, manager and owner of Ripple Café in Macksville told NOTA.

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Initially with Australian payments provider Tyro, Daniel shopped around and changed to Square (a large US-based company) to get a better deal.

“We have had to start charging the fee of 1.6 percent (on all electronic transactions) to our customers just to make ends meet,” he said.

That 1.6 percent translates to 80 cents on each $50 transaction or $16 per $1000 of till takings.

On top of that, retailers surveyed said they paid monthly rental fees from $145-250 for equipment and software, a figure varying depending on how many and what sort of POS devices are used.

A spokesperson noted that Square does not charge monthly rental fees for hardware.

Transaction fees also ranged from 0.8 to 2.2 percent of each total transaction.

The manager of Yamstick Café in Bowraville told NOTA he is “pretty happy” with the service he receives from Square at a cost of 1.1 percent, having chosen to buy a Square register outright.

“When the internet is down though, it may as well be a paperweight,” he laughed.

Newly-elected Nambucca Valley councillor Jane Smith is the owner of Matilda’s at Nambucca Heads.

She told NOTA that Square has allowed small businesses more opportunities to trade, with hand-held terminals and negotiated rates depending on the size of the business.

“In the past we would have had to use one of the big bank options but the charges would have been double or triple this for the same kind of service,” she said.

“We (Matilda’s) don’t on-charge the fee but are seriously looking at doing that, purely because it is the industry standard.

“With inflation, the community is not willing to pay increased product prices but with three minimum wage increases and superannuation recently going up, passing on transaction fees is certainly something we are looking at doing.

“Hospitality businesses generally make about five to ten percent profit; nobody is making more than that,” she said.

Jane estimates her business contributed around $20,000 last year to Square through its banking terminals, monthly fees and other charges.

Some businesses use a different POS system and receive fee-free Eftpos/savings account transfers whereas ‘tap’ and credit card transactions incur a fee of up to 1.5 percent, prompting staff to suggest customers insert their cards and enter a PIN to reduce their fees.

The difference between ‘tapping’ and inserting can be as much as $7.00 on a $500 charge.

“The ‘tap’ costs us, the retailer,” agreed Catherine, owner of Macksville’s Hanging By A Thread.

“Customers have to realise that convenience costs.”

Catherine recently changed to an Australian company (Lightspeed) for her POS system but said she tried to avoid using it because of the high transaction fees – around one percent.

“When I make a large sale, I put my bank details on the invoice and hope the customer can transfer the funds directly,” she said

Her business does not pass on any transaction fees to customers and, according to Catherine, the popular sewing machine and haberdashery shop has never made a profit although in operation for seven years.

“We have been surviving; just breaking even, but we provide a service, and I love what I do.”

Another small business operator from the Nambucca Valley pointed out the link to young people not connecting with how much they spend.

“My daughter got a job and a banking card she could ‘tap’ to pay with,” he said.

“She got a huge surprise to find there was no money left at the end of the week because it was just so easy to ‘tap’ here and there and the small charges add up.”

He thinks that the system conditions people to spend without restraint.

Back on Macksville’s Princess Street, Mr Duong also expressed concern that customers who opt to ‘tap’ rather than pay with cash are distancing themselves from the mathematical reality of their diminished spending capacity.

“I read somewhere that people feel goods and services cost about 15 percent less if they ‘tap’ to pay,” he told NOTA.

Mr Duong says there is some misunderstanding about who is profiting from these charges and how much everyone is actually paying.

“Some customers get so angry that I am on-charging this fee that it has gotten to the point where I have refunded them their money,” he told NOTA.

“They think I’m putting it into my back pocket,” he said.

Federal Member for Cowper Pat Conaghan expressed disappointment that local businesses were paying so much in transaction fees and encouraged them to shop around for the best deal as ‘tap and go’ is clearly here to stay.

“It does reiterate my sincere belief that cash is king, and that residents of our region who want to genuinely support our amazing network of local small businesses should use cash wherever possible.

“It’s also cheaper for the consumer!

“Those 1-2 percent fees on every transaction do add up.”

A spokesperson for the international payments provider Square told NOTA, “Hundreds of thousands of Australian businesses choose to partner with Square because our business is designed specifically to meet their needs by giving them all the tools and software solutions they need to run their businesses.

“We can only succeed when Australian businesses succeed.

“Square’s simple and transparent pricing model provides sellers with payment processing, as well as sales reporting, point of sale software, risk management, PCI compliance, security, and more, all included.

“In the competitive payments space we know that we need to earn our customers’ trust every day, and it’s clear that sellers appreciate the flexibility, transparency, and value they get from a single, simple rate.”

By Ned COWIE