Card payments: time to look for alternatives?

New ways for customers to pay for products online and on the high street are being trialled and launched at a dizzying rate, so it surprised me to read recently that cash payments are on the increase.

According to the British Retail Consortium (BRC), cash payments accounted for 58% of transactions in the UK in 2011 - representing an increase of 5.7% on the previous year. It's hard to dispute that figure given that the BRC surveyed a staggering 59% of all retail transactions in the UK - but I'd bet the percentage would be a lot lower if it was calculated by every pound spent, rather than transactions made.

Cash will probably always be king, but it's big companies are exploring new avenues to provide the next big payment alternative. PayPal has recently announced its inStore app, which allows customers to make mobile payments in high street shops under the Aurora Fashion Group umbrella (including Oasis and Warehouse) without needing a wireless signal or 3G access. This is on top of a partnership the company currently shares with the nationwide restaurant chain Pizza Express.

If your business relies on face-to-face payments you should cross your fingers that such methods become commonplace in the future because this will drive down the fees that you are currently obliged to pay on transactions made by debit and credit cards - at present the only two established alternatives to cash.

In most cases you need to facilitate these payments because that's what customers expect - but you would not be alone if you don't fully understand the costs associated with merchant services.

Not only do you pay a portion of each transaction (a percentage with credit cards and a fixed fee with debit cards), you also pay for the rental of the PDQ terminal (it stands for 'Process Data Quickly'), a minimum monthly service charge and card authorisation fees. Suppliers also partner with security assurance consultancies and charge a fee to provide secure systems and processes that enable you to comply with the Payment Card Industry Data Security Standard (PCI DSS).

The good news is that there are six major suppliers in the industry that all want your business - and switching from one to another is not as difficult as you might think. You don't have to switch bank accounts and although contracts tend to last between one and three years, lots of them are easy to break. In fact, many retail businesses that have switched their merchant services with Make It Cheaper have been up and running on their new contract within a week and saving 20 to 30 per cent on card processing costs.

As long as cash alternatives remain limited and transaction fees stay as high as they are, that's the kind of saving that's worth making.

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MIC

See how much you could save on merchant services and other utility bills by calling Make It Cheaper for a free consultation. It takes just minutes but could save your business thousands. Click here for more information.

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