Battle to find affordable payment system | Fin24
 
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Battle to find affordable payment system

Oct 16 2014 20:13

Cape Town – Technology has opened the doors to new ways of POS (point of sale) payments, giving entrepreneurs more options when running a business.

Fin24 user Gideon Rupping runs a small animal-related product store. “A large part of my clientele, about 70%, pay by debit or credit cards and therefore, I have a merchant POS device,” said Rupping.

“However, the current POS device is getting really expensive and after doing extensive research on the internet, I couldn’t really find any other bank’s POS (merchant) device costs being published.

“It is as if the banks do not publish these fees, such as transaction fees and machine rental costs.

“Which bank’s POS merchant device is best suited to a small entrepreneur (device and costs)?”

Ravi Govender, head of Small Enterprises at Standard Bank, responded:

“Banks have different ways of pricing for POS devices. Some banks charge a very low monthly rental, but have high transaction fees. Others have a high monthly rental fee, but low transaction fees.

“These fees are published online, but it is sometimes difficult to compare the fees due to the different pricing structures.

“The best way to find the cheapest option is to take your actual turnover and do some shopping with the banks. Ask them to illustrate the monthly cost of having these devices. That is the only way that you will be able to compare actual costs.

“Also consider some options from Standard Bank such as BizLaunch, which is specifically focused on start-up entrepreneurs and includes a discounted POS device, or SnapScan, which is an alternative solution to a POS device.” 

Howard Moodycliffe, head of commercial and marketing at wiGroup, responded:

“Unfortunately high terminal and transaction fees seem to be the norm. However, there are some exciting new mobile payment options making waves in South Africa, such as FlickPay and SnapScan.

“These payment applications generally have a much lower terminal fee or monthly fee and often have lower transaction charges. You might also want to look at Ikhokha, which provides a unit that you plug into a smartphone enabling you to process both card and mobile payments."

Key points

Another leading POS payments expert, who wished to remain anonymous, gave this informative breakdown of the industry:

There are three main offline (card present) types of acceptance mediums: traditional, mobile POS and QR code.

Traditional:

Examples: FNB, Absa, Standard, Bank, Nedbank, Capitec and Mercantile Bank.
Upside: Tried and tested and customers feel secure
Downside: Expensive with hidden fees; connectivity costs with fixed lines; onerous application and criteria (six months trading history, trading in a commercial area, minimum revenues) difficult to obtain for small businesses; set-up fee and long lead time for access.
Average transaction charge: ±4% to 6% for a small business.
Monthly rental: Between R600 to R800 per terminal
Set-up cost: About R400 (once off)

mPOS:

Examples: Ikhokha, ZipZap, PocketPOS, Absa Pebble and Yoco
Upside: Affordable, no monthly fees, pay per use, mobile (take it wherever you do business), some mPOS providers offer value-added point-of-sale and analytics functionality.
Downside: Still new in SA, product or usability issues with the new entrants
Average transaction charge: Between 3% to 4%
Monthly rental: None
Set-up cost: Between R 1000 to R 2000 (once off)

QR code apps:

Examples: SnapScan, FlickPay and Zapper
Upside: Affordable, no monthly fees, pay per use, mobile (take it wherever you do business)
Downside: Still new, customers need to download a mobile app, requires change in behaviour, fraud exposure (ecommerce transaction replicated through QR code scanning, no customer authentication)
Average transaction charge: 3%
Monthly rental: None
Set-up cost: Print out (negligible)

- Fin24.

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