Increasing spend through debit and credit card payments

In last month’s newsletter, whichfranchise.com delved into the future gazing world of cashless payment technologies, focusing on the viability of cashless transactions within the franchised business model.

This month we take a personal view by sharing the views and experiences of franchisees and franchisors towards payment solutions, as heard at a recent RBS WorldPay roundtable, the company that processes one in every two payment transactions in the UK.

There is a well-documented connection between offering multiple payment solutions that match the breadth of consumer payment preferences and business success. However, this RBS WorldPay roundtable uncovered a growing trend that may be borne from our recessionary trading conditions – customers are increasingly reaching for their credit and debit cards to even pay for low value ticket goods.

Chris Gillam, UK Managing Director, of franchised business, Mail Boxes Etc, sees this in his own business where average transactions are between £6 and £7, as well as from his personal experience. He explains, “Nowadays I rarely carry cash so if the retailer doesn’t accept cards then they miss out on my purchase. We can’t afford to miss out on these types of purchases.”

Johnny Sellyn, whichfranchise.com agrees, “I now see single coffees being paid for by credit card and once you have taken your card out to pay for that coffee, you might also decide to have a pastry. So there’s a clear link between card payments increasing average transaction values.”

This observation reflects the findings of RBS WorldPay’s research which shows profits rise significantly when improvements to payment systems are made. This is certainly a view shared by James Muirhead, Finance Director for Coffee Republic, “It’s quite simple. Any system that can better manage queues will drive existing spend. In fact good queue management can even attract new spend.”

And while franchisees do accept that payment systems impact on customer service, they remain the poor relation on most business owners’ list of priorities, as Paul Bentley, franchisee of the Hammersmith branch of Fast Signs, explains: “Payment systems are at the bottom of my list of priorities on a day to day operational basis but as one of the few interfaces you have with your customer, your payment system soon becomes a priority if it breaks down.”

So why do so many franchised businesses disregard card payments within the payment mix?

The suggestion is that business owners aren’t always aware of the viability of alternative payment solutions and the fact that there is one to suit all businesses, regardless of how many transactions you make, and their average size. Perhaps this is unsurprising when you consider RBS WorldPay research that shows one in five non-franchised retailers do no research into their payment systems.

In the case of franchised businesses, Graeme Jones, Head of Franchising, RBS WorldPay, thinks this may be down to the fantastic support network provided by the franchised business model, “Most non-franchised businesses don’t think about their payment system until the opening day, despite the fact that effective payment systems have been proven to increase profits. At least in a franchised business the franchisor has generally done the homework for the business owner.”

However, the danger is that as many franchisors devolve the responsibility for managing an increasing number of business functions to franchisees, many will be left without the knowledge to make business critical infrastructure decisions.

Franchisee, Paul Bentley highlights this risk but also the appetite that good franchisees have to improve their business: “I’ve never considered changing the payment set up I had on the first day but as long as it gives me a competitive advantage I will adopt anything.”

As Chris Gillam confirms, “The majority of franchisors nominate suppliers but most are happy to change them as long as the alternative suppliers stick to the same specifications.” Whether you are the decision making franchisor, or the franchisee with devolved decision making powers, the critical factor is doing the homework to make sure that you are choosing the best supplier for your business model.

Luckily, payment providers are there to help. The better ones will take into consideration factors including your average ticket price, whether your business is on and, or offline, and whether you solely trade in the UK or internationally, to develop a bespoke payment system that suits your business needs. The best payment solutions providers, which RBS WorldPay counts itself among, will also offer vigilant security screening processes to ensure that that businesses are protected against potentially fraudulent transactions.

Offering multiple payment methods is, therefore, one of the most straightforward steps you can take to improve your business. As Matt Rowsell, Head of Business Development at RBS WorldPay, concludes: “In today’s tough climate, the most successful businesses are those that can accept the most methods of payment. We’re seeing franchisees being given more control but many will miss a trick if they don’t consider the range of payment solutions which are out there.”

The benefits are clear. Speedier transactions can aid queue management and increase bottom line. This is why RBS WorldPay is encouraging franchisees to consider the payment systems they currently offer to ensure they match the multitude of customer payment preferences.

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.