Surcharging is one method for managing merchant service fees (MSF) for your business. This works well for businesses paying higher MSF to their merchant facility providers. Plus, it can be simpler to implement than you might think, freeing up your time to focus on other areas of running your business.
Our complete surcharging guide will walk you through this important process. We’ll also offer up some tips for kicking off surcharging in your business.
What Is a Surcharge?
A surcharge is a small amount (usually a percentage of a transaction amount) added onto particular payment transactions made by customers (typically contactless and credit card payments in New Zealand).
Over time, merchant service fees can add up and can cost a pretty penny. Plus, some transaction types, and certain MSF packages that businesses have locked in, carry larger payment processing fees. In these instances, surcharging could be a good way to handle these costs.
Surcharging might seem complicated, but implementing it in your business is usually very simple. Payment providers like Smartpay can automatically add surcharges to appropriate transactions on some of our payment solutions, like Long Term EFTPOS Rentals. This means you don’t need to break out your calculator and hold up the queue.
Check out our complete guide to surcharging on a Smartpay terminal for more information.
Alternatively, we also have an in-store payment solution designed to help you save, so you don’t need to bother yourself with surcharging at all. Smartpay Low Cost Tap & Pay offers one low rate across (Visa & Mastercard) contactless debit and credit transactions. Plus, with free rental* on an Android terminal and no network fee, you’ll be lined up to save heaps for your business.
Types of Card Transactions That Incur a Surcharge
In New Zealand, businesses are allowed to add payment surcharges to the following transactions:
- Standard credit card transactions.
- Contactless credit or debit card payments (commonly known as payWave).
- Apple Pay, Google Pay or other contactless payment methods from using mobile wallets on smart devices.
Surcharges can be added to these transaction types because they incur fees for the business. These payment methods are also increasingly popular for New Zealand customers. According to a Payments NZ study, 84% of Kiwis are using contactless payment methods. Meanwhile, the total domestic billings for credit card spending in New Zealand has risen from over $26 billion in 2010 to over $46 billion in 2023.
Is Surcharging on the Cards for Your Business?
Unsure if surcharging is the right option for you? Here are a few steps you can take to ease into surcharging:
- Ask an expert: Find shops in your local area that have surcharges. Ask them why they implemented surcharging and how it has helped their business.
- Work out your savings: Bust out your calculator and figure out how much you stand to save with a surcharge.
- Testing: Payment providers like Smartpay make it easy to implement surcharging on Long Term EFTPOS Rentals with a remote update. This means you can test out how your customers respond to surcharging over a short time period.
- Look for a budget-friendly payment solution: Check out Smartpay Low Cost Tap & Pay! Say goodbye to surcharges and enjoy a simple, low rate for all your contactless Visa and Mastercard transactions. Plus, you can rent an Android terminal for free* with no pesky network fees! It’s a fantastic way to save money for your business while making payments easier for your customers.
If you still need a little more guidance, check out our rapid-fire checklist:
- Does your business accept contactless payments?
- Do your competitors accept contactless payments?
- Are you losing customers because you don’t accept contactless payments?
- Do you frequently have long payment queues?
- Do you serve a lot of younger customers?
- Are you paying high fees for credit card and contactless debit card payments?
- Are you concerned about reconciling large amounts of cash?
If you answered yes to three or more of these questions, surcharging (or Smartpay Low Cost Tap & Pay!) is perhaps worth a try in your business.
Smart Benefits of Surcharges for Businesses and Customers
The good news is that surcharging can offer some advantages for businesses and customers alike. Here are a few reasons why:
- Savings: Business is all about the bottom line. Surcharges help you get a handle on merchant service fees, potentially saving you thousands of dollars each year.
- Growth: Accepting credit card and contactless payments is the perfect way to secure more growth in your business. With these methods becoming so popular, you risk missing out on a lot of business by not offering them.
- Luxury of choice: Modern customers want plenty of choice. This goes for streaming services, artisan coffee shops and payment options. With surcharging, you can easily offer contactless and credit card transactions in your business.
- Lower prices: The costs of contactless and credit card payment acceptance have to come from somewhere. By charging small fees per transaction, you won’t need to raise the price of your products or services. Win-win for your business and customers!
The Fine Print: What Are the Rules Around Surcharging?
There are some rules you need to be aware of when surcharging. The New Zealand Commerce Commission has released a series of surcharging guidelines for businesses to follow. These guidelines are created under the Retail Payment System Act 2022.
The golden rule of these guidelines is that transparency is key. This means that you should have signs or labels in place at the point of sale informing customers about surcharging. You must also offer other ways for customers to pay that don’t incur a surcharge.
Another rule to keep in mind is that you can’t profit from excessive surcharges. Your surcharge fee can’t exceed the additional costs to your business of accepting the transaction in question.
*minimum monthly fee and T&Cs apply
