Global payments giant Mastercard has highlighted the business opportunity for Australian retailers if they were to remove minimum card transaction limits.
The company says Australian businesses could be losing up to 56% of customers due to minimum spends or not accepting card as a payment method.
Its study revealed that four out of five Australians agreed that they resent restrictions such as minimum spends and charges when making payments by card.
To put this to the test and prove that minimum spends can harm revenue, Mastercard conducted the ‘Limit Test’ at the University of New South Wales. The experiment involved setting up two identical coffee carts, with the same prices, menu and coffee, with one cart carrying a $10 minimum card spend and the other a $0 minimum spend.
The $10 minimum spend cart received poor sales totaling $21. In contrast, the $0 minimum spend cart took sales of $240, further highlighting how important it is for businesses owners to rethink their payment procedures.
Matt Barr, Senior Vice President, Digital and New Payment Flows at Mastercard, commented: “It’s time for businesses to seriously consider adjusting their policies, as more and more consumers are voting with their feet and taking their custom elsewhere in response to payment restrictions.
“Our surveys continue to reveal that Australian consumers are choosing to pay by card and are resenting any restrictions on this. If businesses do not adjust their policies soon, there is a very real chance they are going to be left behind, if they aren’t being already.”
Mastercard is currently spearheading a Zero Minimum campaign which urges businesses to offer as flexible payment options as possible to consumers.