Getting Paid - The Future isn't so simple

It was not that long ago that getting paid for the services or goods that we provided was fairly simple, “ Will that be Cash or Check”, in some cases it may have also been charged to the customers account. If you were a large firm and doing international business you may have even done a “Wire Transfer”

More recently Debit & Credit Cards have become common for consumer transactions and EFT, electronic funds transfers, have become common for business to business settlements.

Today I have the privilege of advising you all that the world of getting paid is about to get much more complicated, and regrettably more expensive also.

To start off, Visa and MasterCard have entered the Canadian Debit Card Landscape. These cards work the same as the interac cards that are issued by the major banks and credit unions with one important distinction, they are processed by the credit card companies and instead of the small interac fee, they charge merchant fees based on the merchants discount rate. This will add significant cost to many transactions, so be prepared. And unlike interac transactions, where you can add a service fee for the convenience you will not be able to add a fee to the use of these cards. If you accept Visa or MasterCard you will be obligated to accept these debit cards as well, and you the merchant will have to shoulder the cost.

As many merchants already know, their merchant fees keep going up. A large part of this is due to what is known as “Unqualified Transactions.” An “Unqualified Transaction” may not be what you think it is. In short an “Unqualified Transaction” is much more than a card not present transaction, ie. The card is not swiped on a point of sale device. Unqualified Transactions also include cards that have any sort of points or rewards associated with them. They also include cards that have high spend limits, over $8,000.00 of credit granted to the card holder. Again, if you accept credit cards you have no way to avoid the higher fees charged to you when a customer presents one of these cards. You can however investigate using another transaction processor. Business Analytics represents Pivotal Payments in the Red Deer area, they are a third party, non-bank, payment processor and they frequently can save you money over the fees charged by the major bank processors. Contact us if you would like more information.

According to a recent issue of the Journal “Payments Business” there are about 30 new forms of electronic payment in development, all of which will have new hardware and costs for the merchants that decide to honour the respective payment platforms. Not all will survive, but many such as cell phone payments likely will. At the other end of the spectrum they are also predicting the end of the check within about 15 years or so. Are you ready for someone to pay by their cell phone?







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