- Funding & Finance
- Hi there. I’m getting into contactless pick-up for my customers and want to flip into a new payment gateway for doing this – and as part of this I’m a bit confused about the different payment charges for direct debits, credit cards…Also wondering how I can get the best situation for me. Are there any suggestions you can please point me to, on how to work through this? Thank you!
- Reply To: Hi there. I’m getting into contactless pick-up for my customers and want to flip into a new payment gateway for doing this – and as part of this I’m a bit confused about the different payment charges for direct debits, credit cards…Also wondering how I can get the best situation for me. Are there any suggestions you can please point me to, on how to work through this? Thank you!
Reply submitted 21/04/20 @ 09:40am::
With talk of ‘flipping into a new payment gateway’ can I assume you are looking at effecting payment for a customer via online ordering or a mobile app platform?
Yes, it is best to talk with your current provider which for many is your bank. Banks have a merchant services team that can talk you through the options that they can support for your desired merchant facility.
So! A bit more info to help you with this in terms of understanding, as you say, the confusing payment charges, or what is termed MSF / Merchant Service Fee.
First, the MSF rate (largely a percentage) charged will depend on the classification of your business (by the Acquirer and more on this to follow), your average transaction value, how many transactions per month, and what cards you are wanting to accept.
Second, the MSF has several components that make up the fee which is worth understanding.
MSF rate = Interchange Fee + Acquiring Fee…
Interchange is what the customer cardholder’s bank charge for provisioning payment.
Acquiring Fee consist of further components being Scheme Fee + Switch Fee + Acquiring Bank/PSP Fee
Yes, lots of suitably confusing components! Westpac does a good job explaining this so take a look at their page then come back to the next part on the e-Comm gateway.
e-Comm is a Card Not Present method of payment. Therefore you’re going to be accepting scheme debit and credit cards. Note there is an online EFTPOS solution which could be integrated at some point. Note that Acquirers often have a separate rate card for e-Comm vs. Card Not Present (determined by the calculated level of risk of fraud).
That then leaves you with getting a good price/rate card for the MSF.
You’ll recall the options from the Westpac explainer. They are ‘Bundled’ with fix rate or a variable component, or ‘Unbundled’ where there is a rate for the interchange (issuer) charges, and a separate rate for acquiring.
Again I will point you to another good set of info and benchmark at RetailNZ. They list the preferential rates available to you as a member. Hospitality NZ and the Restaurant Associations also have equivalents.
See Hospitality NZ and the Restaurant Associations as well.
Third, and perhaps the easiest, can be to go with a PSP that is a complete payments platform. Someone like a Stripe makes it very simple to integrate to and all you need is a bank account number for them to settle the funds into (generally t plus 2 or 3 days later).
But you pay for this with a higher rate card. https://stripe.com/nz/payments
I hope this helps. All the best.