Cash Remains King at the Stolberg
Like a lot of bar owners, I got into hospo with a pretty clear vision for what I wanted to create. When we took over The Stolberg we were 100% focussed on creating a unique and interesting space. Atmosphere is everything in this game. If customers are having a good time, the music is cranking and the drinks are flowing, then we’re making money. It’s a pretty simple but delicate formula that’s like gold – when you find it, you do everything you can to keep it flowing.
Alongside food and beverage, a core part of any successful venue is the bar. We know a fast and easy transaction across the bar can be as important to the overall experience as the beverage that’s served. We do everything we can to get customers back socialising as fast as possible so spending money isn’t a point of friction at odds with the rest of the experienceThe two key ingredients of a speedy transaction are:
- A repeat order – we encourage our bartenders to engage the customer and remember their order to make it easy (and personalised) the next time. This also assists with the responsible service of alcohol requirements.
- The customer has the correct cash in their hand
The actual payment method is important here too. And this is where we as an industry need to step up. At The Stolberg we offer PayPass like a lot of places because it’s faster than the old swipe and pin of traditional eftpos. It keeps us aligned with the younger audience who tend to have less cash on them and we find it works well in terms of keeping the bar transactions moving.
All of this is great. But the merchant fees we pay every month are nuts! Now I know I’m not the only bar owner to have an issue with banks and merchant fees – it can add up to the equivalent of another staff member or more. It’s almost insulting to have to pay a percentage of every sale we make like a tax on our revenue line or a sales commission, just for the privilege of getting paid.
Don’t get me wrong, I don’t mind paying suppliers for the role they play in helping us provide our experience to customers. But the rest of our suppliers don’t get to dictate a relationship where they take a percentage of our sales, so why should the banks?
PayPass is like a Trojan Horse the bank has sent inside every venue and allows them to take a chunk of money every month. It’s made worse with the cheap PayPass terminal rentals being offered, which then increase the number of transactions and subsequently the merchant fees. Not to mention the bar looks like a minefield with terminals all over it.
But what are the alternatives? Well, really only cash.
We obviously love cash for the flexibility it provides, it’s on par with PayPass for transaction speed, and our staff earn more tips. But more than anything we like that we get to keep all of it. We don’t have to pay tens of thousands of dollars in fees over to the bank every month. But it’s declining as a percentage of our sales.
When non-bank ATMs were introduced back in the early 2000’s, they were the logical alternative to eftpos and a great way to drive more cash through the business. But there were downsides too. ATM contracts have traditionally been as oppressive as merchant fees – lengthy terms, hidden rollover clauses, no control over the fee and unreliable hardware that breaks when you’re at your busiest.
As hard-working publicans that take all the risk, I believe the lack of control we have over payments in our venues is un-Australian, whether that’s the banks owning our revenue line with merchant fees from PayPass, or ATM vendors dictating how customers get cash in their hands. The payments industry needs a good shake up. It’s time to take control over payments like we have over the rest of our business.
At The Stolberg we’ve done this by owning the cash element of our business. A big part of the decline in cash is because we got lured in by the perceived speed of PayPass. By controlling the way our ATM works, we’re able to bring cash back to being a significant and growing percentage of our sales. In turn this reduces PayPass transactions and subsequently the merchant fees.
I know we’re not alone in our frustration of how the payments industry is failing us. There is no silver bullet but as an industry I believe we need to be smarter than to think digitised payments are the only option, which really only makes us a slave to the banking institutions.
Are you in control of your payments – or is the Trojan Horse being wheeled quietly through your door too? Let me know your thoughts on Twitter at @i_am_tancas.
Publican: Kane Tancredi, The Stolberg