Australian Newsagency Blog

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The mixed message of fees and rewards

Mark Fletcher
September 26th, 2014 · 13 Comments

In a retail business earlier this week I was offered a discount of $5.00 off my next purchase and subject to a charge of 3% for using a credit card for payment. My purchase was $165.00 as it happens. the credit card surcharge was $4.95.

The discount off my next purchase was funded by the store – it was not a brand related offer.

As a shopper, the message I received was confused. It certainly did not encourage me to consider returning to the store.

If you have a surcharge applied based on method of payment, think abut this carefully in the context of any loyalty offer you make at the counter as you could be knocking the good out with the bad. Your messaging needs to be carefully considered.


Category: Newsagency management · retail

13 responses so far ↓

  • 1 Russell // Sep 26, 2014 at 9:20 AM

    While in Sydney for the Gift Fair we visited the Tokio Hotel on Cockle Bay Wharf. I asked the ‘early 20’s female barmaid if I could use credit to purchase drinks – ‘no problem, what would you like Sir?’ was the reply. When I returned to the table with the drinks I found a 50c ‘extra’ on my Eftpos receipt. I returned to ask the barmaid why there was an extra 50c charge on my transaction? The reply was because I used credit. I explained to her that I had asked her about using credit and there was no explanation of a surcharge on credit. I was then told in a harsher voice by the ‘early 20’s’ female barmaid ‘Read It’ on a wall that was approx 10mtrs away. On this wall was an A4 page in size 12 font about the charge. Words were exchanged. Scoffed the stubby and moved onto another bar to have a meal and a beer. Goodbye Tokio Hotel.


  • 2 Dean // Sep 26, 2014 at 10:28 AM

    I do not pay a surcharge, if they insist then I shop somewhere else.

    We do not charge a surcharge, although we don’t accept Amex or Diners


  • 3 Carol // Sep 26, 2014 at 10:56 AM

    How do you calculate the fee that you are allowed to charge a %. Can it be built into our POS. I have customer want their Lotto winning in cash and then use their credit card to purchase to get what ever points they get for using a credit card. This is at our expense and we make precious little on Lotto. I have also been told that been told that in NT and some states customer pay a fee on top of the price for Lotto an scratchies it is not built into the Price , Are those states and NT on a different commission rate to QLD.


  • 4 Mark Fletcher // Sep 26, 2014 at 11:09 AM

    Carol, I’d not charge a fee in my newsagency. That said, you can do it in your software. Follow the law on what you can charge though.


  • 5 David @ Angle Vale Newsagency // Sep 26, 2014 at 12:36 PM

    Carol, I don’t charge a fee, accept it as a cost of doing business, but do have a flexible $10 minimum spend. Will waive that on high margins such as stationery & gifts.

    I happily accept cards, inc credit, for lotto as my two nearest competitors are cash only and I know that I have acquired customers due to my card policy.


  • 6 Steve // Sep 26, 2014 at 1:24 PM

    Lotto,phone credit, even the old bloke who puts a $1.50 newspaper on his card twice a week I dont care. Much better to cop the small cost of doing it than turn customers away because you dont or charging a fee which turns them off you. It does stop customers dealing with you, trust me I’m one of the ones that will walk out and not come back.


  • 7 Steve Sharman // Sep 26, 2014 at 1:52 PM

    We introduced a 20c surcharge on all card purchases on 1st November last year (2% on Amex). From memory only one person has cancelled their transaction in that time (paid in cash). With Tyro fees going up on 1st October I am pleased with our move.


  • 8 peter // Sep 26, 2014 at 2:24 PM

    We charge a 50c surcharge for all purchases under $9.90, all bus tickets and phone cards attract a 50c charge for every $50 spend. We tell every customer of this before making the transaction.
    We used to have the no credit card purchases under $10.00 minimum, but a percentage of people who went to get cash out, coincidentally at a $2.00 charge, never came back.
    We now give a choice, to pay 50c, $2.00, or leave after picking out their item to purchase.
    Most pay. Of those who query the payment, they are ill informed that credit card purchases are free of charges for everyone, we set them straight about the banks and most pay.
    The odd one that doesn’t pay, well generally the shop is a happier place without them.


  • 9 Steve // Sep 26, 2014 at 2:47 PM

    Steve and Peter your’ve identified the customers who make a purchase and then complain about a fee for useing a card. The ones you haven’t identified and don’t know about are the ones that walk in see a sign about fees and walk out and the ones that make a purchase get hit with a fee are annoyed but dont complain. What they do is next time they need something you sell they make a decision not to shop with you. You cant identify them but they are out there and they are now someone elses customer.


  • 10 Ben // Sep 30, 2014 at 9:31 AM

    I was in a shop recently where they offered a $0.50 discount for cash purchases. No they did not stock low margin items such as newspapers or phone credit. But it struck me as a very innovative way to deal with what has become a bug bear for many!


  • 11 rick // Sep 30, 2014 at 3:35 PM

    with more and more purchases made with cards, the costs are starting to mount up,our eftpos fees are about $500 per month, or $6000 a year, and this will continue to grow. Like most here im very reluctant to start charging a fee, BUT at some stage in the future this will reach beaking point for many, so either the banks (and tyro) will have to do something, or small business will have to find a way of addressing it. Forget the big 2 (c & w) they have their own rules on this. One way would be to educate the public that its the financial institution charging the fees , not the business offering the service. Its all very well to say build the fees into the business cost structure, but we all know its not a level playing field. The financial institutions must love the current set up, they rake in a fortune, and we wear the flak if we try to recoup some of it with our own fees. We need to shift the onus back onto the banks and get the customer to identify them as the ones charging the fees, this may also bring about some true competition within the industry as customers chase better deals from card providers. Banks will hate this idea of course.


  • 12 Dennis Robertson // Sep 30, 2014 at 5:41 PM


    yes, absolutely the Banks love it when small business retailers subsidise their own businesses.

    Part of the education of customers you speak of could be calling the fee for what it is. So if a shop has signage up, then instead of calling it a ‘surcharge’, name it for what it is a “Bank charged EFTPOS Fee” I think the term ‘surcharge’ is confusing for some customers and may suggest a fee introduced by the shop keeper. So I think it’s just a mindset thing on the part of the customer that needs working on by the retailers.

    I think once customers have clarity on that issue, I don’t think it would as confusing in the context of any loyalty offer made at the counter. That is the Bank introduced fee is there whenever EFTPOS is used. I agree the message must be simple and clear.

    It’s probably reasonable that Financial Institutions offset expenses by charging an EFTPOS Fee, but I think they are probably skating on thin ice with the size of the fees. After all, at the crux of the successful class actions on Bank Fees is that what they were charging was way in excess of what their actual processing costs were. If one thinks about the scale of the EFTPOS operation, I don’t think it’s drawing too long a bow to suggest unit fees are set too high.


  • 13 Mark Fletcher // Sep 30, 2014 at 9:01 PM

    I factor eftpos fees in when considering mark-ups.


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