payment systems

Keeping Up With Payment Systems Technology

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Featured in Antique Trader Magazine

A recurring scene in futuristic movies shows a character paying for a purchase by touching the screen of a hand-held device, or swiping a wand across a terminal. Thirty years ago such an act was certainly the stuff of science fiction. Today, this payment method is a reality. The future is here.

That is, except for some antique dealers who remain in the payment-processing Stone Age. You know the ones I mean: Checks and cash only, or sometimes layaway.

While entertaining out-of-town guests last month, I stopped at a local antique mall in a tourist town. My guests spent about an hour perusing the mall’s three floors, selecting a few items that could easily be packed in their suitcases for the flight home. They were flabbergasted when they got to the check-out and found a sign that read “No Credit or Debit Cards Accepted, Cash or Good Check Only.” Wanting to hold on to their cash, and not carrying a checkbook (Who carries a checkbook anymore? Isn’t that what debit cards are for?), they expressed their dismay to the clerk and returned several hundred dollars’ worth of merchandise to the shelves.

The following week I phoned the mall owner and asked him about his credit card policy. He steadfastly maintained that he has never lost a sale by not accepting credit cards. When I told him of my recent experience, he said that as far as he knew it was the first time that had ever happened in 20 years in business, and that gaining one sale wouldn’t begin to cover the expenses of accepting credit cards.

An image of an ostrich with its head stuck in the sand came immediately to mind. If this owner honestly believes that he’s never lost a sale in 20 years by refusing to take credit cards, he’s not paying attention. But then, he’s apparently not there to sell antiques anyway; he’s there to collect rent on his space from long-suffering antique dealers.

I continue to be astonished by the short-sightedness of some shop operators regarding the practice of accepting credit cards and other forms of electronic payment. Operators who are firm in their stance to not accept plastic will likely stop reading at this point. By doing so they will once again be shooting themselves in the foot, and the rest of us will pick up the business that they will lose. Like dinosaurs, these stone-age dealers will soon be extinct. Here’s why:

According to an infographic recently published by Community (statistic sources are quoted on the infographic)] 69 percent of consumers age 18-34 and 58 percent of consumers age 35-44 state that they will only shop at businesses that take multiple forms of payment. This is roughly two out of three Gen X and Millennial buyers … and dealers wonder why they’re not attracting a new generation of buyers? Available payment options aren’t the only reason these buyers are staying away, but it’s a reason that can certainly be added to the list.

Accepting credit cards raises the average sale amount for retailers in general by an average of 18 percent. McDonald’s reports that when they began accepting plastic for food purchases, their average sale went from $4.50 to $7, quite a bit more than an 18 percent increase.

Consumers are more likely to make impulse purchases when they can use a credit card rather than the cash in their pocket. Businesses have credit lines because they are concerned about cash flow. Consumers are concerned about cash flow as well. They are more willing to make a purchase if they can defray the cost by using a credit card.

By 2017, only 23 percent of retail purchases will be made using cash. The other 77 percent of purchases were made using some form of electronic payment processing. In just over two years from now, dealers who don’t accept credit cards or electronic payments will be missing three out of four potential sales.

Dealers who have ignored the credit-card movement will find themselves even further behind as technology changes. It won’t be too long before credit cards (when I say credit cards, I’m referring to debit cards as well) are as old-fashioned as paper checks. Wallet-pay apps are becoming more and more common on smartphones. Not having to carry, swipe or keep track of credit cards appeals to an ever-widening subset of smartphone-carrying consumers.

Google Wallet and PayPal have offered a version of the wallet-pay option for some time now. Rolled out in October 2014, Apple’s new Apple Pay for iPhone6 improves on earlier wallet-pay systems by offering one-touch fingerprint-secure payments. But, the touchless near-field reader required to process the ApplePay system is expensive, and few merchants are using it. Even big retailers that can afford the expense like Best Buy and Wal-Mart are avoiding committing to the technology at this point.

For now, wallet applications are a chicken-and-egg issue: Merchants won’t adopt the technology until more consumers are using it, but more consumers won’t use it until it’s being offered by more merchants. Currently, there are more than 9 million retail outlets in America, but only a few hundred thousand of them offer the “wallet” payment option. But, like credit cards a generation ago, the wallet payment option is coming on strong and will soon be commonplace (and relatively inexpensive to offer, as the price comes down).

As more and more consumers become familiar and comfortable with wallet-pay applications, they will begin to demand that merchants accept this type of payment option. Merchants will once again be faced with technology-upgrade questions: Can I remain competitive without the technology? Will adopting the technology pay for itself, or will it be an additional expense? In the ever-changing game of retail, a merchant’s selection of payment options is almost as important as his selection of merchandise.

Previously published in Antique Trader Magazine

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