Cash is no longer King. In Canada cash has recently been replaced by debit cards as the most common form of retail payment. The United States is expected to follow this trend very soon. There are presently 300 million debit cards in use in the U.S. and that number will increase by about 160 million each year.
Most of these cards look just like Visa or Mastercard credit cards and many retailers process them in the same way. This is a costly mistake. Especially for retailers who have a large percentage of transaction that are less than fifty dollars.
Debit card transactions are risk-free. If there are adequate funds in the account the transaction is approved and the money is transferred instantly. There is no chance of a charge back or anything else going wrong.
If however you run these transactions though a credit card POS machine the credit card companies charge you a increased rate and an additional flat fee of fifty cents or more. On small ticket transactions these increased costs can be the difference between a profitable sale and a marginal one or even a loss on low mark-up items. Why do they charge you extra for a risk-free transaction? Because they can. That is the only answer I’ve been able to find.
With the economic crisis spreading to the credit card industry, each month more of your customer will be using debit cards, and each month you will be giving up more of your profit margins to the card companies.
To counteract this trend many national chains and independent operators have been quietly changing to systems for processing these cards that not only eliminate charges but actually make money on every transaction. In Canada these new systems have become the rule rather than the exception for most small ticket retailers.
According to AT&T Global; the average ATM in America net in excess of $20,000.00 a year. But, in the past, the big cash machine had several drawbacks; they were expensive, needed a dedicated phone line and had to be stocked with large amounts of cash with sometime attracted a criminal element.
To overcome these obstacles several international manufacturers have designed a new generation of cashless ATM systems. These systems have all of the advantages and none of the downside. They are much less expensive, need no dedicated phone line and as the name implies are cashless. They are available on tax deductible lease to own programs and some companies offer no up-front out of pocket deals that in most cases allow the equipment to pay for itself while providing a nice profit each month.
In today’s economic climate can you afford to let $20,000.00 a year slip though your hands while your credit card charges climb ever higher? If you don’t want to charge some of your better customers the service fee, just give it back to them. You will have still saved yourself the credit card charges and your special customers will feel appreciated.
The author is a 30 year veteran of retail and food and beverage ownership. Now retired he eeks out a sub-standard living as a webmaster for a leading distributor of ATM systems though out the U.S. and Canada. His sub-standard work can be viewed at [http://cashlessatm.info]