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How to make sense of payments technology and merchant fees
Three different retail merchants help explain technology options and merchant fees, in simple terms.
3 minute read
Choosing payments technology and understanding merchant fees is not always easy. Information around fees can be hard to digest. This is because there are changble ingredients for each fee. Each transaction is like a different meal; different ingredients have different costs, and meals are made with more or fewer of the ingredients.
The four ingredients for merchant fees:
- The type of card being used by the purchaser (‘interchange fee’) - different card types have different fees
- The card payment scheme cost (‘scheme fees’) - applies to the likes of Mastercard, Visa, Amex etc.
- Transaction type charge (‘transaction fees’) - fees vary depending on things like whether a card is present or not (in the case of online), and if it’s contactless. New Zealand-issued debit is free
- The bank processing charge (‘acquirer margin’) - often confused as the overall ‘merchant fee’, this is actually the smallest part of the total.
More detail is available on fees here.
Here are some case studies using fictional businesses that will help bring technology and merchant fee pricing to life. This may be helpful, but of course we invite you to talk to us about your options, and what suits you best.
Aroha
Aroha makes small-batch fruit kombucha which she sells at community markets. Her product is popular, but her sales volume significantly varies month to month, since the number of market customers can be heavily impacted by things like a rainy day. Being a market seller means Aroha’s shop is always on the go, and she has a lot of stock to manage. She needs a small, cost efficient, transportable, easy, and reliable solution for accepting payments.
Aroha’s choice -
BNZ Pay
BNZ Pay is an Android, app-based, payment solution that lets her take contactless payments without needing a terminal. This on-the-go solution does not need to connect with any other point-of-sale system. Aroha pays fees only when it’s in use, but always has access to its point of sale and reporting, free of charge.
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Packaged pricing plan
This plan is based on fixed fees* aligned to set levels of sales. It removes the variable of different fees associated with different cards, so Aroha always knows what she’ll be paying at each sales level. And if Aroha takes a seasonal break without any sales, she knows there are no fees at all.
| Example Month | |
| Sales | $600 (across a range of different card types) |
| Net sales | $520 |
| Amended | |
| Merchant Fee | |
| Level 1 sales (first $400) | $5 (flat fee) |
| Level 2 sales (remaining $120) | $1.32 (capped at 1.1%) |
| Total fee | $6.32 |
| Percentages are of net sales. |
Sam
Sam’s downtown café is renowned for cinnamon buns and the perfect flat white. It’s popular and has a growing reputation among tourists following great online reviews. Sam’s business turns over a high number of daily transactions, so the payment solution has to be fast, accept local and international cards, and enable the team to take payments at the counter or the table.
Sam’s choice -
PayClip
This mobile point-of-sale terminal has a lot of the same Eftpos terminal features, but it comes at a lower price. PayClip accepts all major cards (Mastercard, Visa, Amex, China Union Pay), and it’s also able to take swipe Eftpos payments which are fee free (on New Zealand-issued cards). It also has easy-to-enable functions such as tips, plus there’s a specialist team always on hand to help.
Split pricing**
A popular pricing plan for retailers, Split pricing is a cost-efficient option for high sales volumes, and it is particularly attractive for businesses with high contactless sales. Pricing is based on a percentage of net sales, fixed fees across card types, and a low price for contactless on New Zealand debit cards (0.7%).
| Example month | |
| Sales | |
| NZ debit cards | $10,000 |
| NZ credit cards | $15,000 |
| International cards | $1,000 |
| Eftpos cards | $2,500 |
| Fees | |
| NZ debit cards | $70 (0.7%) |
| Credit cards | $225 (1.5%) |
| International cards | $29.50 (2.95%) |
| Eftpos cards | $0 |
| Total fee | $324.50 |
| Percentages are of net sales. |
Emma
Emma’s got a great eye for style – it’s so good that she’s successfully made it her business. To capture more customers across the country, Emma has recently transitioned her business from physical to online retail. For Emma’s business, the customer purchase experience should be seamless, so the technology solution for payments also needs to support things like inventory management, shipping and logistics.
Emma’s choice -
BigCommerce
This is an all-in-one webstore solution based on simple and intuitive templated page builders. It also has a built-in customer relationship management tool, inventory management, easy integration with shipping and logistics partners, and search engine optimisation for top of page results.
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Packaged Pricing for BigCommerce
This is similar to Aroha’s plan (above) and is based on fixed fees aligned to set levels of sales. It removes the variable of different fees associated with different cards, so Emma always knows what she’ll be paying at each sales level.
| Example month | |
| Sales | |
| A range of different card types | $15,000 |
| Fees | |
| Level 1 sales (first $14,750) | $285 (flat fee) |
| Level 2 sales (remaining $250) | $4.25 (capped at 1.70%) |
| Total fee | $289.25 |
| Percentages are of net sales. |
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* Packaged pricing is available for BNZ customers who:
- process up to $150,000 in net sales per month
- process less than 10% of net sales on international cards
- process less than 10% of net sales on corporate cards
- settle all transactions to a BNZ business account.
Other eligibility criteria may apply.
** Split pricing fixed rates apply for merchants who:
- settle all transactions to a BNZ business account (a premium of 0.45% applies for merchants who settle transactions to non-BNZ business accounts)
- process less than 10% of net sales on corporate cards.
Subject to credit criteria and merchant services terms and conditions.
This article is solely for information purposes and is not intended to be advice with respect to any matter discussed in it. If you need help, please contact BNZ or your professional adviser. Neither BNZ nor any person involved in the material accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.