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Online businesses big winners from surcharge changes

September 4, 2017 Business News No Comments Email Email

Online Australian retailers may be beneficiaries of new surcharging regulations for small businesses, according to new research commissioned by American Express.

One-in-five (19%) Australians will abandon an online purchase because of an unexpected surcharge. If online retailers removed surcharging, they would see a dramatic increase in sales; last year Australians walked away from $4.33 billion[1] in transactions because of surcharging. 

More than 1,000 credit card users were surveyed as part of the research conducted by Retail Doctor Group (RDG), which sought to better understand consumer behaviours in response to payment surcharges. 

New regulation takes effect from today (Friday, September 1), that will prohibit excessive surcharging on credit cards by smaller retailers.

Brian Walker, Founder of RDG said “Unexpected surcharges are one of the leading causes of digital shopping cart abandonment. Removing surcharging ultimately leads to a more positive purchasing experience online and in store – it’s a bottom-line benefit to businesses and consumers.” 

The research also considered the impact of reducing or removing surcharging on physical retail stores. More than one in five consumers have complained on the spot to a business about being surcharged, while 20% have taken to social media to complain about excessive fees, and 21% have vowed not to shop at the business again. 

Many Australians (47%) estimate that credit card surcharges cost them up to $20 per month, with one in six putting that figure up to $40 per month. Almost all Australians (88%) are in agreement around removing or reducing surcharging. 

Emily Roberts, Vice President Global Merchant Services at American Express said the findings confirm that surcharging is bad for business. 

“Removing surcharging means fewer complaints, more repeat business and increased sales. In an industry up against heightened international competition, addressing the issue of surcharging presents a new opportunity for local businesses,” she said. 

In July, American Express announced it aimed to double the number of small businesses accepting its cards in the next two years, and has lowered merchant service fees for tens of thousands of Australian small businesses that choose not to excessively surcharge American Express card members. 

Additional findings from the research include: 

•        Small retailers could see the number of repeat customers increase by 30% by reducing or going surcharge free, with repeat customers spending 67% more than new customers

•        90% of customers said they considered past surcharging practices when deciding whether or not to return to a business 

For more information about the American Express merchant program please visit: www.americanexpress.com.au/whyacceptamex

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