Ian: Welcome to the Business Coach Podcast, an advice-oriented series that tackles the hot issues and opportunities facing Canada’s small businesses. I’m your host, Ian Portsmouth, the Editor of PROFIT Magazine and we’ve developed this podcast in cooperation with BMO Bank of Montreal.
Well, every company likes to get paid for their product or service of course and the more promptly you are paid, the better. That’s what makes payment processing so important to your business. Now joining me to discuss the whys and the hows of the card-based payment tools that are available to Canada’s small businesses is Brian Green, the Senior Vice President of North American Marketing and Gateways Services for Moneris Solutions Corporation. Brian, welcome to the Business Coach.
Brian: Thanks so much for having me.
Ian: So Brian, I know a lot of the retailers in our audience are familiar with various card-based payment tools available to them but why don’t you give us a brief overview.
Brian: Sure, I would be happy to Ian. At Moneris Solutions, we are in the business of enabling the acceptance of credit, debit and gift-card privately-owned card payments for really any business. Although certainly the most traditional business to accept cards are retailers and restaurants, increasingly businesses that serve other businesses are also offering cards as a way to pay.
Ian: Now, can you give us a sense of what percentage of businesses in these various categories, and I am thinking specifically of business-to-business situations are using card-based payment systems?
Brian: Well, I can’t tell you an exact percentage, there are so many different types of sub-categories that fall into business-to-business. You know, it’s everything from the printer to the gravel quarry. What I would tell you is that business-to-business is our fastest growing segment and with increasing speed, these businesses are seeing how acceptance of payments speeds up the way they get paid and provides a valuable service to their customers, I would say a service that is increasingly in demand by small business. They really want to see their vendors provide card payments as a way to pay for a number of reasons.
Ian: So it makes it easier for the customer, it shortens your accounts receivable. Do you have any numbers on how much faster companies tend to get paid when they accept more direct forms of payments?
Brian: Well a lot of companies do offer card-based payments because of the speed of getting paid, it is all about getting cash flow into their business faster, it is a huge advantage over cheque-based payments let’s say which often require you to wait 30 to 90 days to receive your funds. By accepting credit cards, you better manage your cash flow gap between receiving funds from customers and paying your suppliers. You also save money on eliminating collection service fees and write-offs and the numerous communications sometimes you have to have with customers in order to get them to pay. Did you know that for every $1000 of sales, small businesses on average loose $5 to collection agencies and $15 to write-offs? Certainly, that is going to vary from business to business but that is a pretty good sort of rule of thumb average. When you offer the option of credit card payments, you can clear a path to receivable faster and approve cash flow.
Ian: What about the paper trail that traditional invoice and cheque process generates? Do you preserve that in the card-based payment process? And a secondary question to that is, is there any other additional data that this process allows you to collect and analyze?
Brian: Ian, also a great question. I think a lot of small businesses don’t know about the functionality that they can get with credit-card solutions. I think for a lot of us, as consumers anyways, our experience is simply to see the data that ends up on a statement. But a small business person now has tools that are available to them at a very low-cost basis that delivers, you know, essentially almost a client management system for payments. Monaris Solutions has just such a product, we call it eSELECTplus and demos of it are available on our website at www.moneris.com. And eSELECTplus is designed specifically for business-to-business and trained businesses are more consistent on time payments ffrom their customer plus faster and more reliable access to their funds and real time online reporting. It is a web-base system so businesses don’t need to take package software and they won’t need assistance setting up the software. They just log in through the web, log into eSELECTplus and they are up and running. It also allows for recurring payments. So if they are in, if they are providing let’s say steady service to their clients such as, let’s say those that are in premises management, lawn care or uniform services, they can set up their customers on a regular billing arrangement and essentially notifying their customer of requirement to pay, let’s say monthly or whatever frequency they serve their customers with.
Ian: Now speaking of lawn care, my lawn care supplier still drops off an invoice in my mailbox and I take a little while to get around to it and I pay it and there is a big delay there where as if they were allowing me to pay at the door, they would get paid really quickly. You want to talk a little bit about mobile payment services?
Brian: Oh indeed Ian, I am glad you mentioned that because mobile payments are much more affordable and reliable now than they have never been. They are more reliable for two reasons, one is, we all experience mobile phone users, the networks have a much broader reach now and are much more reliable. A mobile payment solution is essentially just a payment served over the phone embedded in it. It’s designed to be a little bit smaller so it is, you are able to carry it around. Onsite business-to-business services organizations are knocking on our door in large numbers looking for long-range mobile terminals. Essentially, it has all the functionalities of a point of sale terminal but you can bring it to your customer and you can accept any form of card-based payment with this device. It is easy to use, very easy to carry and durable.
Ian: Now what fees are involved in card payment systems. Obviously there is a set up fee, it probably ranges dramatically depending on whether you are looking for something stationary versus mobile, but there is also the on-going fee. So what can a business expect to be paying here?
Brian: Well there are all the fees components that you mentioned, we have set up fees which will range in a neighborhood of let’s say a $100 to $150 depending on the complexities of the business and then there is also solution fees. So for example, our long-range wireless terminal costs $75 a month per device however that does include air time, so there is no additional air time billed for those devices. And then accepters of card-based payments will also pay a merchant discount rate for their credit card payments which is -essentially a percentage of the amount of each transaction and that can range anywhere up to let’s say 3 or 4 percent depending on the nature of their business, how much financial risk is inherited in their business. At Moneris, we have people on the phone who are ready to speak with any interested parties and provide them with a price. The debit transactions are charged a per-transaction fee which would be let’s say up to $0.15 per transaction.
Ian: Brian that’s great information. Thanks for taking time out for the Business Coach.
Brian: Ian thanks so much for the opportunity.
Ian: Brian Green is Senior Vice President of North American Marketing and Gateway Services for Moneris Solutions.
That’s it for another episode of the Business Coach Podcast. You can download other installments in the series from BMO.com, profitguide.com or iTunes. And as always, I’d love to hear your feedback and suggestions for future topics. Send them to email@example.com.
Until next time, I am Ian Portsmouth, the Editor at PROFIT Magazine, wishing you continued success.