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Post-Lockdown Pain Continues with Increase in Card Transactions

  • Written by Smartpay CEO Marty Pomeroy

While it's more convenient for consumers to use digital wallets and contactless transactions, merchants are seeing their card transaction fees increase as well as trying to survive post-lockdown

Covid-19 lockdowns heavily impacted small businesses, especially those which couldn’t trade online. Whilst these merchants have been slowly recovering since the pandemic, increased merchant fees have provided yet another pain point for SMEs.

Since the initial lockdowns in 2020, Smartpay, Australia and New Zealand’s largest independent EFTPOS provider, reports merchant’s card transactions have jumped 20% compared to pre-lockdown transaction figures in 2019.

This overall increase in these transactions indicates sustained growth driven by lower cash usage and the shift to a cashless society. Cash usage has been decreasing for years but Covid-19 has helped speed up this shift. Card payments rose again in 2021, up 13.1 per cent on 2020; 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. 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,” says Marty Pomeroy, Chief Executive Officer at Smartpay.

Marty Pomeroy, shares some business tips that SME merchants could invest their card transaction fee savings in, to maximise their business for 2022.

Stabilise Cash Flow: For any business struggling after Covid-19 lockdowns, using savings to cover running costs and stabilise cash flow would be a high priority. Steering a business back to regular trading whilst improving cash flows is a great position to be in when planning for next year.

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.

Marketing & 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.

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.

Smartpay helps their merchants save or eliminate these fees with savvy retailers using these savings to invest in their business and manage cash flow into the new year.

Small Business Case Studies: Investing Transaction Fee Savings into their businesses

Covid-19 lockdowns impacted a huge number of Australian SMEs. To work though this challenging period, Pizza Box Express Owner Rima was forced to cut as many costs as possible to manage cash flow, noting that reducing staff schedules significantly was hard. “We reviewed other expenses and found we had been paying a lot for merchant transaction fees, so we made the switch to Smartpay,” said Rima, who will be using the savings from her reduced merchant transaction fees to cover bills and expenses and manage cash flow.

Planning for fresh produce purchasing was the most challenging aspect of running a small business during Covid-19 lockdowns according to Orange Grove Deli owner Ange. On top of reducing staff hours, Ange reduced or removed other costs during this time. “Moving to Smartpay and eliminating our Eftpos fees was our biggest reduction in costs. Smartpay offered a great solution to help us remove our Eftpos fees after identifying this as an unnecessary cost. The savings helped us pay for our pre-Christmas orders and cover some staff hours. We are saving around $500 to $600 per month, that’s approximately $7000 per year, which is substantial for a small business like ours.”

Luke, the owner of La Deli and Queen Victoria Market, notes that prior to the lockdown only 20% of his customers were paying with a card, now it’s 95% and many customers are using contactless digital wallets. “All of a sudden my costs went up and I was forced to raise my prices to cover this increase which I really did not want to do.” Smartpay’s Zero Cost Eftpos solution provided a great alternative for Luke. “By passing on a small surcharge to my customers when they pay by card, I was able to keep my prices the same. Long-term, Luke is planning on reinvesting the savings from his merchant fee reduction into La Deli. “The savings are helping to pay for other bills, which is critical for my cash flow. In the future we plan to reinvest the savings into the business.”

For more information visit Smartpay.

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