Who takes a slice of your pie and how to reduce these costs?
Any transaction made by a credit or debit card is subject to transaction costs – third parties taking a slice of your sale. This is also true for many forms of mobile app payments, including the likes of Apple Pay and Yoyo Wallet that link to a debit or credit card. These types of mobile payments, although seemingly convenient, are actually adding another party to the list of those taking a slice of the transaction.
So, who takes a slice? Let’s have a look at the parties involved for both online and in-person transactions…
- The Card Scheme – most commonly Visa, Mastercard or AMEX
- Payment Service Provider – the party responsible for obtaining an approval (or decline) code for the transaction. These usually come in the form of a subscription package.
- Payment Acquirer – also known as the Merchant Account Provider – responsible for using the approval code to transfer the funds from the customer’s to the supplier’s account.
- Issuing Bank – the customer’s account. These fees are covered in the Payment Acquirer’s fees.
- Mobile App Payment – such as Apple Pay or Yoyo Wallet. Obviously, this one only applies when payment is made via mobile apps*.
People I speak to are often quite surprised about the number of parties taking a chunk of your sale. Exactly how much they take all depends on the mix of different parties involved in each transaction. We can be assured of there being a mix of percentage fees and fixed fees. Fixed fees apply regardless of the sale value, which is why many organisations only accept a minimum transaction value for card payments. This ensures transaction costs are always covered.
However, minimum transaction values, do not offer fantastic service for customers, especially in typically low value, high volume environments such as bars and catering facilities. Neither does it offer the retailer great value, given a chunk of their sale is being taken by third parties. These fees can add up to a sizable amount when 1000s of customers are making 100s of transactions in any given year.
Therefore using a solution where users can pay from a balance held by the organisation is surely the answer. A user simply tops their account up by, let’s say, £20. This £20 can then be used for multiple purchases. Transaction costs are only incurred when topping the account up rather than for every single purchase made. The user’s account can be linked with existing ID cards so all the user has to do is scan their ID card to make a purchase whether this be at a till, collecting a print job, vending machine, laundry or other points of sale. This means speed of service is in line with other contactless payment methods, is quicker than chip&pin and cash transactions.
No cards? No problem, these can be provided as part of the solution and can be integrated with third party systems ensuring a seamless cashless environment with a huge reduction in costs, increased spend and increased customer satisfaction.
If you would like to know more about how MonitorIT can help you create a seamless cashless environment then please call us on 01494 565066 or email us via firstname.lastname@example.org