Matt Rowsell, Head of Business Development at RBS WorldPay

The debate about whether the UK will become a cashless society continues, but whilst we are not yet paying for goods and services with a blink of the eye or microchip implants, payment technology innovation looks set to continue, driven by consumer demand.

Yet despite consumer research revealing a preference for cards over cash, many franchisors continue to regard card payment acceptance as complicated and expensive. Many are also unaware that a small change to payment technology can have a beneficial impact on the bottom line – as well as to customer service offerings. As RBS WorldPay research recently found, most businesses that made recent improvements to their payment systems reported a signficant profit increase. So the argument for reviewing how your franchisees accept payments is a compelling one in the current climate.

The good news is that whether they operate on or offline, with single or multiple units, or transact small or large-ticket goods, there is a card payment solution for every single one of your franchisees.

Cost-savings

First, let’s consider the overheads that can be cut by accepting card payments. These include high insurance premiums levied if franchisees store cash on their property overnight. On average, a third of franchisees work alone and are unable to bank cash regularly so this can become an unavoidable situation. By reducing the amount of cash that passes through tills and is stored on premises, insurance premiums can reduce across the business.

Dependency on cash also increases exposure to fraudsters attempting to use fake notes – many of whom, sadly, target franchised operations. As vigilant as your franchisees may be, insider theft from employees is another unfortunate aspect of business life. However, reducing the quantity of cash being handled can also reduce these opportunities.

Taking card payments can help overcome some of these concerns. The quantity of cash on franchisee premises is reduced, reconciliations are easier and the payments are protected.

Business boosting

Card usage has also been seen to increase average ticket sales, and consumers are now spending more on cards than ever before. In recent years, £354 billion was spent on cards annually, with expenditure on cards growing at around 13% per annum according to APACS statistics. RBS WorldPay research indicates that consumers prefer to use cards, with four in ten (42%) even saying their lives would be much easier if they could pay for everything with cards rather than cash. Furthermore, research undertaken by Independent UK Credit Card Comparisons revealed that around a third of consumers carry only £10 or less on them in cash and nearly half of consumers only withdraw money from a cash point once a week or less.

For online sales, a bespoke solution created in partnership with a knowledgeable provider, who will guide you through the process and assess your business’ unique needs, is essential. Online payment systems have to be watertight, and this is reflected by consumer demand. 55% of people ranked security as the highest priority, ahead of speed or the ability to get a refund on a purchase.

It is critical that every single transaction has gone through a thorough checking system to confirm that the customer is bona fide. For example, RBS WorldPay’s Risk Guardian puts transactions through hundreds of checks which take less than three seconds - unnoticeable to the online customer but providing peace of mind to both franchisee and franchisor. Details given are cross-checked against data from third party suppliers and our own group customer base, so any anomalies are highlighted immediately. This three-second check can make the difference between a secure business transaction and a security nightmare.

The future of payments?

So, if your franchisees’ customers are not using cash, what are they using? There’s no shortage of options, including the relatively new ‘contactless’ card option which allows them to ‘wave and pay’ or ‘tap and go’ for goods up to the value of £10. Developed for the convenience sector, these are ideal for low-ticket goods like fast food and drink, and speed up queues as well as offering competitive transaction fees. Higher average ticket prices are better suited to advanced solutions offering debit and credit card transactions using secure chip and PIN technology.

Even using a mobile phone as a payment device is likely to soon become commonplace. Customers are already comfortable browsing the internet or checking bank balances with their handset, so using adapted phones for payments seems a natural progression.

But are customers really that future gazing? Well, our research shows consumers are very forward-thinking when it comes to payment methods - seven in ten expect to be buying small value products with a handheld device within the next ten years and a third (29%) expect to soon pay for goods and services with automated face recognition.

Thinking ahead

As you will be only too aware, even in the current economic climate the search for good franchisees is a competitive one. If you offer a sound payment system as part of the business processing package, it’s one less thing for the franchisee to worry about, allowing them to concentrate on making their business a success instead.

Growth – online or otherwise – can only come from looking towards the future, and effective payment systems are absolutely fundamental to robust business expansion. Rudimentary systems may suffice if you run a single unit but a franchised network needs something more sophisticated when running multiple branches or expanding online. Admittedly, in our recessionary trading conditions, this may not feature high on current lists of priorities but there’s a strong argument for investing in platforms now for sustainable future business growth.

Evidence shows that offering card payments can increase the bottom line, enrich business intelligence and better suit customer preference. So offering card payment facilities is a natural step. The only real challenge lies in finding the right solution for your franchisees, but trusted and experienced payment providers will happily guide you through the plethora of products to identify the best solution for your franchised business.

To discuss your payment needs with an RBS WorldPay expert, please call 0870 366 1290 for online solutions or 0800 01 01 66 for face to face.

www.rbsworldpay.com

RBS WorldPay is the unification of seven leading retail payment solutions brands – Streamline, Streamline International, Bibit, WorldPay, RiskGuardian, RBS Lynk and Payment Trust. RBS WorldPay is the leading payment acquirer in the UK and Europe, and the third largest in the world. It operates in over 40 countries, in 120 transaction currencies, in 14 settlement currencies. In 2007, RBS WorldPay processed 4.4 billion transactions worldwide. RBS WorldPay is part of the RBS Global Transaction Services business.