We know that many of our customers love to use Afterpay to purchase one of our beautiful gifts. We love to give all customers the opportunity to purchase a baby hamper, new mum hamper, or baby shower gift, no matter their financial situation. We are also proud to stock a variety of hampers at different price ranges to allow all customers to purchase from us. Afterpay gives our customers the benefits of purchasing products now and paying in manageable repayments. This is a wonderful freedom for customers, but what Afterpay doesn’t like to share with its customers is that it charges an enormous fee to retailers.
Did you know that Afterpay charges 6% per transaction to retailers?
As a customer, you might be completely unaware that retailers pay a fee per credit/debit card transaction. For regular credit or debit transactions, it is around 2% of the sale amount. This amount is factored into sale prices, and why some retailers will charge a small fee for transaction amounts under $10 (or a similar small amount). As a business owner, I can see that this fee is reasonable. Banks need to pay for the facilities and infrastructure to check credit and debit card transactions. They also take on the risks of having to return money from when credit cards are stolen, or credit card fraud occurs. There are also other costs involved with the banking system. Retailers recognise this, and we are happy to pay the small fee of around 2% to pay for this.
However, Afterpay has taken this to the next level. Instead of the regular fee of around 2%, Afterpay takes around 6%. That means if a customer orders a baby gift hamper for $100, $6 goes directly to Afterpay. This may not sound like much, however, it adds up very quickly to take up an enormous amount of our profit margin. When you consider that our $100 sales also cost around $15 to mail through Auspost (we post in large boxes), we really are unable to make much profit when 6% of our sale is taken up in fees.
We don’t want to pass on 6% to our customers
In order for us to sustainably grow in our business, we need to be able to turn a profit, and we need to make enough money to pay our expenses. This means, we need to pass on costs that we incur to our customers. However, I don’t feel that it is fair to pass on an extra 6% of all sales to our customers. We know that inflation is very high at the moment, interest rates are continually rising, and costs of all sorts of products are increasing. We have already had several suppliers increase their prices, and we have had other suppliers discontinue some products, meaning we have had to source alternative, more expensive products.
We want our products to be affordable for customers, and don’t want to have to continuously increase our prices. We also don’t want our business to be put into a position where we are unable to grow or unable to continue offering our beautiful products to customers because our costs are too high.
Also, most of our customers pay using regular debit/credit card or Paypal. We also don’t feel it is fair to pass on this exorbitant fee to those customers. We want to keep our prices fair and transparent, and not pass on unnecessary fees.
Other Buy Now Pay Later Options:
If you would still like to buy now and pay later, we are happy to offer PayPal pay in 4, and we will be exploring other options that do not charge fees as high as Afterpay.
But Amazon and other big retailers offer Afterpay. Why can’t you?
Firstly, I doubt that Amazon and other big companies pay the fees that small businesses pay. Baby and Mumma Gifts is a husband and wife, mum and dad team. We don’t make the millions of sales from millions of customers like Amazon does. For big companies, Afterpay fees might be just a drop in the ocean, but for small businesses like ours, they are enormous.
As a small business, we also have a strong commitment to our loyal customers. We want to avoid charging more than we need to.
We recognise that this may not be the most popular decision for our customers, but please know that by not using Afterpay, we are actually keeping our prices down for the benefit of our customers, while ensuring our business can grow sustainably. This allows us to continue creating beautiful gifts for new mums and babies, without the fees.
Please feel free to contact us with your thoughts on this, we are happy to explain it further. We will continue to deliver our beautiful gifts to all the new mums and mums-to-be in Australia and New Zealand for you.
Rachel and Tom