What your customers think about your payment policies

SmartCompany, October 5, 2017

In an increasingly cashless society, not all customers are getting a fair deal at the checkout.

People wanting to use a credit or debit card to pay for purchases are often confronted with store policies of a minimum spend or a surcharge fee.

While some business owners say merchant fees are the cause of their minimum spend policy, consumers and even other business operators say it is a “flawed and skewed” tactic that could force consumers to shop elsewhere. The latter camp believe traders should negotiate a better merchant fee deal or simply absorb fees into single item prices before registering them at the checkout.

As the SmartCompany investigation into payment offerings of traders continues, consumers are saying business payment practices need to be more aligned with consumer buying habits and get on board the cashless society.

“Carrying cash is less common now and it is more convenient to use a card,” shopper Ellen (surname withheld) says, who is also a business manager at a retail outlet.

“If you want to use a card for purchases, then you should be able to use it. I would walk out if I had to pay in a certain way only.”

Learn more about how a zero minimum card spend policy could improve your customer experience.

James (surname withheld) agrees: “I have questioned and asked a business why they have a minimum spend on cards – I was told it was because of fees, but if a business believes it is because of fees then they should check it out. It’s not good customer service to limit payment offerings.”

The practice appears to be more prevalent in takeaway food outlets, bakeries, cafes, fruit and vegetable shops and smaller independent variety stores. A feeling of entitlement to control payment options can be a driver behind trader behaviour, the SmartCompany research reveals.

As online shopping continues to disrupt traditional bricks and mortar businesses, shoppers say the minimum spend tactic could inadvertently be contributing to a change in buyer behavior, and question whether traders are doing enough to create a good customer experience in store.

Consumer Erin Jones says she recently walked out of an Asian food outlet in south-west Victoria because she didn’t have cash to pay for a takeaway meal. After ordering and readying to pay with her debit card she was told the minimum spend at the store was $20.

“The person behind the counter was quite rude about it, too. I simply didn’t have cash on me and didn’t need anything else,” she says.

“If businesses want you to shop with them, then they need to be more in step with how people shop. I am sure I am not the only one who rarely carries cash nowadays.

“I remember 30 years ago working in an office and security guards had to walk with me to deliver pay packets to staff. Now, pays are done electronically, so when do you really get a chance to get cash – except withdraw it from a supermarket when you get groceries or pay a fee at some ATMs?”

One business keen to keep pace with consumer habits is charity group Variety. The not-for-profit is reworking its business model to include paywave scanners in fundraising activities.

“We recognised that people don’t carry a lot of cash nowadays, but they still want to donate to charity,” says Variety CEO Janette Connolly.

“For the past six months we have been using the machines at cafes, petrol outlets, shopping centres and at our fundraising events and we are finding people like the idea that they can purchase a coffee using their card and then tap on our machines to donate something. It is convenient for them and we saw we had to adapt to changing behaviour to stay relevant.”

For Variety, it could be the point of difference that leads to more contributions and a better customer experience, something that James, Erin and Ellen would be appreciative of.