I was out a while ago with my wife and we decided that for lunch, we go to a nice vegetarian eatery that is a part of a plant nursery in one of Adelaide’s beachside suburbs.
What can I say, the meal was fantastic, followed by coffee and cake. All a very enjoyable experience, until it came time to pay, oh no, they don’t have a merchant facility, they only accept cash.
So across the road, I run, to the service station to withdraw cash to pay for our bill. Will I go back? Probably not, maybe if I have cash in my pocket to pay for the bill, which will be unlikely as I mostly pay by card. My wife was told, while she was waiting for me, by the owner that it is not cost effective to have a merchant facility.
Not cost effective, what does that mean? A merchant facility cost, they normally have a flat monthly fee of say $25, and a transaction fee of up to 2% for credit cards and up to 1% for EFTPOS (these are only estimates).
For a business to say that it is not cost effective, then one would assume there aren’t any costs involved in going to the bank, sorting cash and cheques to be banked and the potential of losing clients (like me, who pays by card for 95% of my transactions) or is there a cost
I have a staff member who fills out my deposit forms, tallies the cash and cheques and then travels to the bank, stands in a queue and returns to my office. Wages and on-costs would be at least $25 per hour. Hang on, I could go to the bank myself, that would silly as my time in my business is worth more than $25 per hour.
So if the above business feels that it is not cost effective to have a merchant facility, then they don’t have a staff member that does the banking or they don’t put a value on their time in the business.
Is it cost effective, to have a merchant facilities or not?