According to Tyro data, hospitality businesses are by far the biggest adoptees of surcharging, overtaking retail establishments by 18 percentage points, health by 19 percent points, and services by 14 percentage points.
The reason behind hospitality’s high uptake of payment surcharges could be the growing acceptance of surcharging among hospitality consumers. The hospitality industry is renowned for having add-on charges such as tipping and delivery fees, so consumers are already accustomed to them and are unlikely to kick back at another one, like an EFTPOS surcharge. In most cases, customers anticipate these extra costs as part of their overall experience. This expectation makes it simpler for hospitality businesses to adopt surcharging practices without significantly increasing the likelihood of deterring customers.
Surcharging is on the rise.
In addition to surcharging being most popular in the hospitality sector, its uptake has increased nearly every month since 2021, with a sharp increase in recent months.
In light of growing concerns about an economic slowdown, this trend can be attributed to heightened awareness among businesses of potential economic challenges ahead, which is prompting them to explore additional methods for managing costs. Given the relatively receptive nature of hospitality customers towards surcharging, businesses in this industry have been quick to embrace surcharging as a viable strategy.
Eateries surcharge more than other hospitality sub-industries.
Cafes, restaurants, pubs, and bars have the highest uptake of surcharging, with accommodation and vineyards showing a far lower take up proportionately. This divide could come down to the perceived value of the surcharge.
A surcharge is always relative to the transaction size and that relativity sits around 1 to 3 per cent, depending on the merchant service fee and on the transaction fees of the card used. 1 percent of $10 is only $0.10, but a quick miscalculation (that customers often do) can have them incorrectly believing that the surcharge is $1, which has a real impact on their perceived value of the fee.
In addition, a small surcharge like $0.10 doesn’t have much tangibility in value when considering what can be bought with $0.10; however, 1 percent of $1000 equals $10, which has a more tangible associated value that could make customers reluctant to let go of it. The higher the transaction size, the higher the surcharge and the higher potential for kickback from the customer. This is perhaps why accommodation, liquor stores, and vineyards, aren’t as big on surcharging, as transaction sizes are typically higher in these industries.
Surcharge with confidence with Tyro.
If you’ve decided that surcharging is right for your business, then Tyro’s Dynamic Surcharging1 can take the guesswork out of it.
It allows you to set your surcharging rates easily via the Tyro Portal which is then automatically applied to various customer cards. You will also be able to calculate EFTPOS machine rental into the surcharge and understand your surcharge amounts based on transaction size and card type.