SHOPFLOOR ANALYSIS | Payment options


Kent, highlights, speculating that this is “most probably [because they] have the funds readily available”. But, alternatively, Richard McHenry Ebberns


of Bathrooms in Hemel


Hempstead considers his customers’ financial security. “Bank transfers offer zero protection,” he explains. “And the people I tend to deal with are very aware of this and wary even though they are dealing with an established local independent retailer of 40 years.”


Concerns


Hibbert of KSL and the KBSA though feels that information available to savvy customers now can alleviate concerns, saying: “They are able to get a credit report on a business for only three pounds, and if you have a facility such as CreditSafe, you can follow a business, and this will let you know if they have outstanding debts to their suppliers as the credit insurance bodies report them in.” Instil’s Landhed agrees, declaring: “Customers are happier to pay by bank transfer now as they are reassured by the company name check, and online banking notifications. Sometimes they will send £1 first to be doubly sure!” So on to the ever-popular credit and debit cards – a tried-and-tested system, but not without its drawbacks (not least the charges it accrues). But it turns out that KBB retail is classed as ‘high risk’ by card providers. On a recent kbbreview podcast, Libby James from Merchant Advice Service was asked why this was the case. “There are three main reasons,” she explained. “First, the transactions tend to be higher amounts, then the lead time between the transaction and the delivery of the product tends to be quite lengthy. This leaves the bank open to risk and then the third reason is charge-backs, which tend to be higher than normal.”


If card companies see the industry as being a higher risk, then that might explain why customers see it this way too. With no retailers I spoke to having had to deal with charge-backs – when the card company takes the money back off you because the customer has complained and/or said that they didn’t receive the goods – it seems that we’re all being ‘tarred by the same brush’ and having to pay as a consequence.


Overall though card charges seem to have been redu- cing for some time and levelling off between credit and debit cards. There has always though been something of an outlier in the shape of American Express, which had been charging around 4% for


trans actions,


which is under- standably a turn-off for retailers, with


44


Hughes, Landhed and Hibbert all saying that they don’t take AmEx. Other issues for card payments


include GDPR compliance, such as keeping card details secure and hire charges for PDQ machines – although this market is being disrupted by players such as iZettle and Sum Up. For customers at least, credit card payments do offer them a degree of protection, which they understandably might seek out due to the large amounts often transacted in our industry, so most retailers will still accept this method of payment. According to Hughes, some customers “want the security of paying via a card” and will “make at least one payment via a card, then are happy to pay the rest via BACS”. This option of part-payment on credit card, generally the deposit, is also offered by Landhed, who reveals “we still take payments by card if the customer insists, but only took three last year”. She also adds that “if there is a long time from order to installation, we will sometimes consider adjusting down the deposit requested, if this gives reassurance to the customer”. Making sure that a deposit is secured before a customer leaves


We’ve almost eradicated all credit card payments – it is bank transfer all the way. Not only is it the most cost effective, keeping our quotes competitive, but it’s also easier to reconcile and search for if any questions ever arise


Elizabeth Pantling-Jones, managing director, Lima Kitchens, Milton Keynes


the showroom is often a priority for retailers, and card payments are great for securing that, with Dan Macijasz, showroom manager at Versatile Group in Ireland, saying: “I really like credit cards because I can take some money straightaway, but I prefer larger balances paid by bank transfer to avoid the fees.”


Charges


So, what alternatives can retailers offer at the point of order to give customers peace of mind and protection but avoiding credit card charges? Pantling-Jones of Lima Kitchens suggests that “paying into a deposit protection [scheme] is often more cost-effective and is something we do with all non-credit card payments”. A move which is echoed by Hibbert who explains “we have almost eliminated credit cards due to the protection customers receive from the KBSA consumer care scheme… I offset this fee against a credit card fee”. Finally, and very much a feature of the low-to-mid sector of the KBB industry, is finance, which for certain retailers is their payment ‘bread and butter’. I went into this topic in some detail in a previous issue of kbbreview, but it is worth mentioning that – not unlike credit cards – the convenience for the customer comes at the cost of the retailer.


Hughes says that they did have finance available but it “is very expensive for us to offer. It can cost us around 10%. We have stopped


offering it at the moment. We tell them it would be cheaper to get a loan”. So,


what about the future


of


payment methods in the KBB industry? There are some new and innovative alternatives to traditional banking already being used, with Landhed telling me that “we take card payments online through Revolut”, a system also mentioned by Versatile’s Macijasz, who revealed that “some customers are using Revolut, as there is no charge, and no conversion fee”. Crypto currencies have hit the headlines around the world, but they are known to be highly volatile and unregulated. In order to address this, a state-backed digital pound is likely to be launched later this decade to ensure the public has access to safe money that is easy to use in the digital age. The Chancellor has said the central-bank digital currency (CBDC) could be a new “trusted and accessible” way to pay but will not be built until at least 2025. Let’s see if this comes to fruition. So, it seems that, for the time being at least, both bank transfers and credit/debit cards will be the main payment method for KBB businesses, and this seems to suit all parties. Or perhaps we could go back to the medieval barter system? I’ve personally had a customer pay for his kitchen in sand and known a struggling business pay its debts in brassware stock. Nick Warrington, owner of Stuart


Warrington & Co in Macclesfield, tells me “I’ve taken payment measured in bottles


of beer from a local craft


brewery”, but he follows up by forlornly saying “sadly it was only for a replacement shower”!


• April 2023


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84