Today’s retailers are in the middle of a revolution in payment receipts as cash and cheques are going and being replaced by electronic money, which goes straight into your pos system. The question here is at whose expense is this change? This question worries my readers here.
Firstly, let me say that cash and cheques handling is not free. It takes time just taken to get cash from the bank, time taken to prepare documents for banking and after that time taken to take cash to the bank, after that there are costs such as incorrect change, stealing, etc. These costs are in total difficult to measure, but as a rule, a retailer needs a few percent margin just to pay these costs say 1.5%. These costs are NOT INSIGNIFICANT. Hold that thought!!
Then there are also hygiene factors for many of our clients in the food industry. Who wants to get a cash notes and coins in a bakery with cream on it.
Secondly do we really have a choice? Many people now for example carry almost no cash. For many people if you cannot handle electronic money, they cannot buy from you. The really bad news for retailers is that the enthusiasm with which Australian consumers have taken to contactless transactions, has created the conditions were they have no choice but to accept them.
Contact unit where a person has to enter a pin number or sign is generally about 9 cents fixed.
As contactless payments are now starting to take off. The problem here is that being contactless they are being routed through a different part of this complex chain through the banking network and so will incur extra costs. Although these costs tend to vary, they generally are about. 9% to 1.2% say 1.05%.
Now let's do some calculations, say you are in an SMB where you are doing 40 transactions of about $50 a day or about $2,000 on EFTpos daily.
With cash, assuming, you can get it; this will cost you about 1.5% or about $30. Despite what many think cash is the most expensive and least insecure payment service you have.
With the contact system, it costs you 40 transactions x 9 cents = $3.60.
With paywave, contactless, it will cost you about $21 less then cash but sigificantly dearer then contact.
This is the"hidden" burden.
There is some good news. EFTPOS Australia has begun to roll out cards capable of contactless transactions with cheaper fees.
