Article provided by Walletdoc
South African businesses are faced with a plethora of choices and confusion if they want to accept credit and debit card payments. For this reason, walletdoc, a successful South African fintech startup, has developed this guide to choosing the best card payment mechanism for your business.
Leonard Shenker, joint CEO of walletdoc comments, “Consumers are cash-strapped and this creates cash flow issues for businesses. For this reason, we developed a new way for businesses to collect more money from customers using easy and secure online credit and debit card payments on invoices and statements, turning invoices and statements into virtual credit card machines. But the truth is that each business has its nuances. We developed this quick guide to help a small or large business select the right solution for its particular needs.”
Key questions to consider when selecting the right card acceptance mechanism for your business:
- Will you need to accept cards when customers are present with their cards or not?
- Where can you get the best rates?
- Does it accept all major credit cards including American Express and Diners Club? You will likely be quoted rates for VISA and Mastercard and if you want to accept American Express and Diners Club, you need to negotiate rates directly with Diners Club and American Express
- Are there upfront fees and device costs?
- Are there monthly rental fees?
- Is integration required to use the solution i.e. do you need to involve developers which will add cost and time?
- Does the solution integrate with your accounting system?
- How easy is it to reconcile payments?
- How fast can you get up and running?
- Is it convenient for customers as well as your business?
Card and customer physically present at the time of payment (perfect for face-to-face payments)
Point of Sale (POS) devices
POS devices and are typically devices provided by your bank. These may be difficult to access for small businesses due to onerous application criteria.
Device rental: R300 – R800 per month
Average transaction fee: 2.5% – 5% excl VAT
Mobile Point of Sale (mPOS) devices
mPOS devices are better suited for SMEs with lower volumes of transactions and for merchants who may need a more mobile solution. You can expect to pay from R1 000 to R3 500 upfront for the device and transaction fees are on average 2.75% – 4% excl VAT. Examples include Yoco, iKhokha, ZipZap, Nedbank PocketPOS and Absa Pebble.
Non face-to-face payments – the customer is not in front of you
Website e-commerce payment functionality
Here you allow customers to pay via your website and other digital offerings. You will need to integrate the payment capability into your website which will take time and money and you will most likely need to involve developers. You pay a flat per transaction fee to the payment gateway as well as fees to your bank which are around 3.5% or more on average.
QR codes enable quick payments for customers to use their mobile phones to pay. Your customer will need to have downloaded the payment app, registered and be a user of the appropriate QR code payment app. Consequently, utilisation may be low. You may also experience unreferenced and incorrectly referenced payments. Transaction fees are in the region of 3% for the standard QR code offerings in the market place.
Taking card details for payment over the phone
This violates security regulations and is consequently prohibited. Don’t do it! Consider walletdoc business.
Turn invoices and statements into virtual card machines
The only provider currently is walletdoc business. There are no upfront nor monthly fees.
Transaction fee of 2.7% excl VAT for all cards including Diners Club and American Express.
Sign up is in minutes. No system integration is required and walletdoc is compatible with any accounting system.
Businesses simply send their bills to walletdoc which then sends the bills to their clients in real-time with the embedded debit and credit card payment functionality. Bill recipients do not need to download walletdoc nor be existing users. Detailed bill payment management information indicates which bills have been received, opened and which have been paid.