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Wondering whether to pass on the cost of acceptance (COA), for EFTPOS transactions to your clients or not?  

In the hair and beauty industry, salon and spa owners are always seeking ways to optimise their finances without compromising on client experience. However, one often overlooked aspect is how to handle the cost of EFTPOS and credit card transaction fees.  

Passing on the EFTPOS transaction fees to clients is increasingly becoming a popular cost-saving measure for businesses navigating a tough economy.  

If you’re torn between whether you should wear this cost or pass it onto your clients, here’s what you need to know.  

kitomba pay terminal with appointment book

What does it mean to pass on the ‘cost of acceptance’? 

Firstly, it’s important to understand what it means to pass on the cost of acceptance. 

With every card payment comes a fee, and that fee can be covered by the business/merchant, or the client, depending on what you as the business owner chooses.  

It’s perfectly legal to pass on the cost of acceptance to your clients, as long as you are not surcharging.  

Surcharging is when a business/merchant charges more than the fee they got from their provider to make a profit. This is illegal. 

That means you can’t profit from the cost of acceptance, it’s merely to cover the cost. When you sign up for a point-of-sale terminal with Kitomba Pay, we’ll talk you through your options.  

Puravida beauty therapist checking out client

What are the benefits of passing on the cost of acceptance for your salon?

Improve your salon’s profit margins 

By passing on the cost of your transaction fees to your clients you will directly improve your bottom line. Typically credit card processing fees range from 2.7% to 3% per transaction. 

Even if you were to pass on 1% of the transaction fee to the customer you would maintain healthier profit margins. 

Transparent pricing 

Believe it or not, by passing on the COA you’re bringing transparency to your pricing structure. This is because customers are made aware of the additional costs associated with their credit card payments, which leads to a better understanding of your salon’s pricing.  

 

Additionally, make sure you know your operating costs for different payment methods so you can surcharge correctly. We created Kitomba Pay to help you save money on your operating costs and increase your profits. When you sign up for Kitomba Pay, you’ll pay one flat rate. Click here to take a look at our competitive rates. 

Oscar oscar salons receptionist

Reinvest your savings 

The funds saved from not absorbing transaction fees can be reinvested into your salon or spa. This could mean upgrading salon equipment, offering staff training programs, launching marketing campaigns, or even simply improving the overall salon environment. 

How much can passing on the cost of acceptance save your salon? 

Let’s break down the potential savings. Assume your salon processes $100,000 in credit card transactions annually, with an average processing fee of 1.7%. By absorbing these fees, you’re effectively paying $1,700 per year! Here’s how the savings can add up: 

By charging customers a partial surcharge (1%) 

  • Cost absorbed by salon: $850 
  • Cost passed to customers: $850 
  • Annual savings: $850 

By charging customers a full surcharge (1.7%) 

  • Cost absorbed by salon: $0 
  • Cost passed to customers: $1,700 
  • Annual savings: $1,700 

These savings are substantial, which means that over five years, a full surcharge could save your salon almost $10,000! 

While your clients will hardly notice the fee, your business certainly will over time. 

busy salon doing client hair

How to pass on the cost of acceptance in your salon or spa

Communicate with your clients

Ensure your clients are well-informed about any COA. Transparency is key to maintaining trust and avoiding negative customer reactions. Clearly display your COA policies at the point of sale and on your website. 

If you’re concerned about customer pushback, start with a partial COA. Pass on a portion of the cost, such as 1%, and absorb the rest. Monitor customer reactions and gradually increase the surcharge if feasible. 

Check compliance

Always check the legal requirements for your country to ensure you are complying with COA and surcharging laws. 

  • Click here to find more information on Australia’s laws. 
  • Click here to find more information on New Zealand laws. 

By passing on the cost of acceptance for EFTPOS transactions to customers, you will significantly boost your salon or spa’s profitability and financial stability. The funds saved can be reinvested back into your business, enhancing service quality and customer experience. 

Remember, COA is not just about covering costs; it’s a strategic decision to optimise your salon’s financial health and future growth. 

If you’re wanting to reduce your bank fees and save time for your team and clients with a unified all-in-one payment solution, learn more about Kitomba Pay, it’s our secure payment solution for EFTPOS and online payments designed for hair and beauty professionals.  

Sign up to Kitomba Pay terminals today! (Available in Australia only).