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‘We double our revenue by not surcharging credit cards’

Adam Zuchetti
Adam Zuchetti
16 September 2016 3 minute readShare
A pile of assorted credit cards

A high-profile national retailer has spoken to My Business about the benefits of not imposing credit card surcharges on its customers.

Darron Kupshik, CEO of homewares retailer House Group, says the retailer has never imposed credit card surcharges on its customers’ purchases, questioning the wisdom of preventing customers from using their preferred payment method.

Losing business needlessly

“Retail is very, very difficult at the moment; it has been difficult for the last few years. So to get a customer in your store, to go through all the effort of convincing them to purchase a product, not having them go and buy that online from one of the pure online players, and only to get to the counter and be told there's a surcharge, sometimes that can actually push them away from a sale.”

That unpleasant experience can also, Darron says, mean not just one lost sale but the potential loss of a repeat customer.A pile of assorted credit cards

“More often than not, it actually creates a negative perception on you as a retailer: the customer doesn't necessarily see it as a charge that the merchants levy or one of the financial institutions. They see it as the retailer levying that charge on them, so they tend to always walk away with a negative connotation,” he says.

“The feedback we've always gotten from the floor and from our managers and our support team is that you want to make that overall experience good, and we've only ever seen positive results from doing that.”

Short-term pain for long-term gain

As well as the negative perception of retailers who impose the unpopular levy, Darron says his business actually makes more money by not recouping credit card costs directly from the customer.

“Looking at those types of customers who are using those credit cards where there usually is an additional surcharge, that's the exact type of customer that we are trying to attract to our company and to our stores,” he explains.

“We tend to find that those customers will spend more for what we call the 'basket size': so they will spend more during the purchase. In our system they tend to join our VIP program and they become repeat customers.

“We can assess that and look at how much a VIP customer is spending [compared with] a non-VIP customer, and it's about double for us.”

It is for these reasons that House Group acts as a major ambassador for the Surcharge Free Campaign, which is trying to eradicate the fee from mainstream retailing for the benefit of the industry.

“I think there's quite a lot of exposure in the media about companies that do surcharge, but there are a number of companies that don't actually surcharge,” Darron says.

“We have sites all over the country, some of our sites are more expensive to run than others ... [but] we don't seek to recover those costs from our customers.”

How to calculate cost/benefit of surcharging

Darron has this advice for business owners who may be debating whether to continue passing on the surcharge or suck up that additional cost in the hope of long-term gains.

“We have sites all over the country, some of our sites are more expensive to run than others – it might be because of the mix of stock that we've got, or it might be because of the different trading hours or it might be the type of shopping centre where the rents are higher. [But] we don't seek to recover those costs from our customers,” he says.

“We want to give them a consistent experience in-store and not look at it from a perspective of 'these are our costs and we're going to recover those costs from you'.

“My advice to other retailers and other businesses is that you've got to look at it from the cost-benefit equation; you've got to look at what is the cost associated with doing it, but then what is the benefit? Can you measure whether those customers are repeat customers? Are they loyal – are they coming in multiple times? How much are they spending? Do they spend more at the time of checkout if they know that they are not going to be charged an additional surcharge? Are they likely to have additional credit on that card that they are likely to spend?

“When you weigh all of those factors up, you can [often] identify that you are actually making additional revenue.”

‘We double our revenue by not surcharging credit cards’
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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