Taking card payments, negotiating the minefield
“The fact is that one of the earliest lessons I learned in business was that balance sheets and income statements are fiction, cash flow is reality.” – Chris Chocola
There is no doubt that the movement from cash to card payments continues to move forward rapidly, it is anyone’s guess when the world will become cashless, but almost all businesses will require the ability to take payments by card, both debit and credit card.
The industry that allows small business to process cards is generally dominated by huge global companies that, whilst heavily regulated, sell via commissioned agents whose attitude to compliance can be somewhat suspect.
The charging structure can be hugely confusing. Different charges for debit and credit card, different charges for Visa, MasterCard and Amex, minimum service charges, authorisation fees and terminal rental.
To add to the confusion the invoices can come from three different directions; the acquiring bank, the sales company and the leasing company for the terminal (the chip and pin machine itself).
It is a proven statistic that companies seldom change provider, partially because of the confusing scenario and also because of the fear of service disruption. As a result it is really worth getting it right at the outset.
So some guidelines:
Create a typical monthly scenario for your business at maturity; how many £’s will you take on card payments, split it between credit and debit. What is your average transaction value on each card? Take this scenario to three different companies and ask them to quote. You will be then able to compare like for like and then look at actuals when they arrive.
Also, test their backup services, who will you contact in an emergency and how will they support you?
Some issues to watch out for with card payments:
All companies who accept cards must be PCI (Payment Card Industry) compliant, this governs the way you handle data and card details. It is based on an easy questionnaire to fill in on line, and only you can do it, but if you fail to do it the added charges are deliberately punitive.
How long is the contract? You probably won’t change, but it is worth managing risk.
If you are taking cards through an online portal, watch out for the integration issues with your website, someone in your team will need to understand the technicalities.
How long does it take to get your money into your bank account? If you are cash constrained the difference between getting your money in one day or three days can be important.
Seek expert, independent advice from recommended suppliers who know what they’re doing! Signing up with the wrong provider can mean years of poor value and worse service!