The hidden cost in some POS software that most retailers don’t calculate

You know your monthly software subscription cost. But do you know your total POS cost, the total cost of ownership of the POS software in your business?

Some retailers are shocked when they calculate this.

There are popular POS software platforms charge a percentage of every EFTPOS transaction. It’s called a transaction fee. It sounds small — 1.4%, maybe 1.75% — but it adds up fast.

That’s a cost of ownership of the software.

A shop doing $400,000 a year in card payments at 1.4% pays $5,600 a year in transaction fees. At 1.75%, that’s $7,000. At 2.5%, it’s $10,000. Every year. On top of your subscription. On top of your merchant facility fees. On top of hardware costs.

Some platforms structure it differently. Instead of a transaction fee, they require you to use their own payment processing system. Choose your own bank or EFTPOS provider — Tyro, your bank, whoever you prefer — and they add a significant penalty to your monthly bill. Same outcome, different packaging.

For a small independent retailer operating on tight margins, this is real money. Money that doesn’t appear anywhere in the advertised price.

Here’s what to do before signing up for any POS software. Ask these questions directly, and ask for the answers in writing:

• Are there transaction fees on EFTPOS payments? At what percentage?
• Is there an additional fee if I use my own payment processor?
• Are there monthly fees per terminal or per location?
• What is the all-in monthly cost at my current card transaction volume?

The advertised price and the actual cost are often different things. A platform advertised at $79 a month can cost $800 a month once transaction fees, terminal fees, and payment processor penalties are included.

Some software charges a flat monthly fee with no transaction fees and no EFTPOS penalties — and lets you choose your own payment provider freely. Tower Systems works that way. It’s worth comparing on that basis before you commit to anything.