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partners, so it’s always worth checking out what each charge as a starting point. Then, almost all want you to enter into a contract for one, two, three or even four years. I recently met a man who told me that he had been paying £40 a month for over three of his four- year contract, by the time he finishes paying he will have paid out almost £2,000 for a terminal that costs around £300! This raises the issue of terminal rental versus buying a terminal: most companies do not let you have the choice of buying a terminal, most simply want to rent it to you under a lengthy contract, tying you in for as long a period as possible.
However there are a few companies that will organise a MID for you, sell you a terminal and provide merchant processing services with no contract to tie you in and no monthly rental costs. What you will pay will be a monthly SIM cost to connect the card terminal to the mobile network and a monthly charge for transaction costs.
most companies do not let you have the choice of buying a terminal, most simply want to rent it to you under a lengthy contract, tying you in for as long a period as possible
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But, as ever, with many and various types of merchant credit card processing schemes, comes the good, the bad and the ugly. It is important the supplier understands precisely what you as the franchisor need from such a scheme and the level of turnover being done by your franchisees – that will often be a merchant in their own rights and therefore subject to issues of frequency of usage and turnover banding, which can then determine the costs. There are some common factors across the varying schemes that need closely looking at, not all is apparently as it seems and most schemes delicately hide the true cost of operating with them, or at least make it difficult to discover what the true costs are.
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Openness is not something this sector is overly renowned for, very few have websites that clearly show the true cost of becoming one of its merchants, so contrasting and comparing one against the other is difficult and time-consuming.
Looking at the varying elements of getting a terminal, set-up fees range from free to £165, which usually covers the administration costs involved in obtaining a merchant identity, known as a MID, which is mandatory if you want your own terminal. In part it may also cover some of the risk of taking on a merchant. There are a few good companies that don’t charge set-up fees or waive them if you are part of one of their associations or affiliate
When it comes to transaction costs and monthly transaction minimums there are varying extremes. Some of those companies that tie you into a contract will often charge you a lower transaction rate depending upon how much you pay in terminal rental, so, for some there is a direct relationship between the length of the contract, the monthly terminal rental charge and the transaction costs. Transaction costs looked at on their own can vary from as low as 1.1 per cent to more than three per cent for standard credit cards and 11p to more than 30p for debit cards, but you can never just look at these in isolation. Some will cost you typically £20 a month minimum transaction charge, irrespective of your transaction usage.
If, as a potential mobile franchisor merchant, you are currently looking for a suitable merchant services provider; think about how much card turnover you are going to do, how often you are going to be using cards, how long you want to be tied into a contract and do you even want to be tied into a long-term contract? Look around at those that are honest and open about the service they deliver. n
mORE INFO
Graham Hoyle is a founding director of PayYours, an independent sales organisation, dedicated to mobile traders. For more information, email
graham@payyours.co.uk, call 0161 855 3979 or visit
www.payyours.co.uk
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