Merchant fees a pain point for COVID-impacted small businesses

Small retailers who have work hard to recover since the pandemic are being held back by increased merchant fees according to new research by Smartpay, Australia and New Zealand’s largest independent EFTPOS provider.

The data reveals that merchants’ card transactions have jumped 20 per cent since the initial lockdowns in 2020 compared to pre-lockdown transaction figures in 2019. The rise in fees involved with these transactions hampering the recovery of many SMEs, especially those who weren’t able to trade online.

The research reinforces the perception that cash usage is waning, pointing to a shift to a cashless society. Cash usage has been decreasing for years but COVID-19 accelerated the trend, with Smartpay’s data showing card payments in 2021 were up 13.1 per cent on 2020 figures, while digital wallets jumped 90 per cent in the same period, with 68 million monthly transactions.

“This transaction data indicates SME merchants have started to rebound after many struggled through the COVID-19 lockdowns in 2021,” Marty Pomeroy, Chief Executive Officer at Smartpay, said. “But the increase in card usage equates to an increase in merchants’ fees, adding to costs at a time where saving costs is crucial to small to medium sized businesses.

“Depending on the merchant’s service provider, small businesses have the opportunity to offset these transaction fees and shield themselves from this increase, allowing them to reinvest back into their business,” Pomeroy added.

Pomeroy went on to share some key areas in which SME merchants could invest their card transaction fee savings to maximise business success 2022:

  1. Stabilise cashflow: For any business struggling after COVID-19 lockdowns, using savings to cover running costs and stabilise cashflow would be a high priority. Steering a business back to regular trading whilst improving cashflow is a great position to be in when planning for next year.
  2. Negotiate with your suppliers: You should review your suppliers or seek alternatives from your current suppliers to get a better deal. Making the switch to new suppliers can help your business save and investing these savings to cover any financial gaps can prove beneficial long-term  You should do this for your business EFTPOS as well.
  3. Marketing and loyalty: Investing in advertising and marketing can have an exponential effect on business. Even small amounts can be invested into online and social advertising, or marketing campaigns – there are often simple, or free, CRM tools businesses could use. Savings could also be invested into new, financially viable rewards with new redemption rules to ensure loyal customers keep coming back.
  4. Recruitment: Savings could go into hiring new staff, increasing hours or investing in training courses; ways in which businesses can stay ahead of the curve and continue to deliver high levels of service over the busy summer trading period.