(10 June 2011 – Australia) The latest merchant payments research carried out by East & Partners has revealed that as well as over half of all businesses planning or actively considering applying a surcharge, the 28 percent of merchants who are currently surcharging are also applying different rates dependent on the card used in the transaction.Diners Club experiences the highest level of merchant surcharging with Micro
merchants applying an average rate of 5.0 percent on the transaction value and
SME merchants 4.1 percent. By contrast both Institutional and Corporate
merchants surcharge at the highest rate on AMEX card transactions at 2.9
percent.
As well as different surcharge rates, the top end of town are also more likely
to apply a surcharge in the first place in comparison to their SME counterparts
with 39.0 percent of Institutional merchants applying a surcharge on their
customers using Visa during a transaction while only 19.9 percent of SMEs do the
same. Interestingly, fully 53.6% of SME’s apply a surcharge on AMEX users
compared to only 21.0% of Micros.
The research also revealed that online businesses were surcharging up to three
times the amount than their over the counter equivalent. “Online merchants
evidence substantially more aggressive surcharging behaviour than high
street…retailers” Paul Dowling, East & Partners’ Principal Analyst commented.
Mr Dowling continued, “Whilst, as the RBA has rightly noted, there is a
proportion of “blended surcharging” occurring in the market, we see significant
levels of differential surcharging by merchants, both in terms of the proportion
of merchants surcharging and the level at which they are doing so.”
“Surcharge incidence and rates vary not only by card type but also very
significantly by merchant type (where a merchant segment has some pricing power,
both incidence and rate tends to be much higher) and the payment channel
involved (online merchants evidence substantially more aggressive surcharging
behaviour than high street, terminal present retailers – typically twice as
high)” Mr Dowling concluded.
About East & Partners’ Australian Merchant Acquiring and Cards Market report
The six monthly produced reports is a demand research service focussed on the
Australian Merchant Acquiring market covering the Top 500 institutional,
corporate, SME and micro business merchant markets, the service is based on
direct interviews with approximately 2,700 companies.
Market analytics reported to clients include transaction and dollar value
volumes, merchant relationship development and management, terminal population,
merchant channels, product penetration, share of mind, market size and forecasts
analytics, service pricing and competitive merchant service satisfaction and
churn opportunities.
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Institutional (Top 500) A$530 million plus
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Corporate A$20-530 million
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SME A$5-20 million
- Micro Business A$1-5 million
For more information please contact:
Sian Dowling
Marcomms & Client Services
East & Partners
t: 02 9004 7848
m: 0420 583 553
e: sian.d@eastandpartners.com