Ingenico Group's Ben Wagner talks about benefits to restaurants of moving from card-not-present to card-present transactions
Every business likes to run efficiently, save on costs, gain the most out of its resources and optimize operations, but all too often restaurant businesses leave easy money on the table. For example, in the ever-increasing restaurant delivery business, merchants often inadvertently overlook the real toll transaction costs and payment card fraud are taking on their bottom-line profitability amidst the always competitive restaurant industry environment.
One area that it pays to devote some attention to under this heading is your restaurant's practices regarding so-called "card-present" (CP) and "card-not-present" (CNP) transactions. There are big differences in costs and other factors related to these two types of transactions which can have real consequences for your bottom line if you're not at least considering a move toward more CP transactions.
CP and CNP: The difference that makes a difference to restaurateurs
CNP transactions are beneficial in eCommerce environments, where they add to the convenience of paying for goods via an online portal. Merchants can also use CNP to collect recurring payments from customers for subscription-based services such as gym memberships, since CNP covers the hassle of collecting payments in person every month.
However, in sales environments where the merchant has the opportunity to physically collect payments from their customers, CP transactions should be preferred as they are more secure. In these transactions, both the card and the cardholder are physically present, thus validating the authenticity of the transaction.
The benefits CP transactions offer include:
Cost Savings: In a CP transaction, the issuer charges a lower fee to the merchant than in a CNP transaction. For example, at a pizza restaurant with an average order ticket of $20, the total base rate charged to the merchant is 48 cents for CNP versus 34 cents for CP transactions.
Over the course of a thousand orders, that amounts to $480 in fees versus $340. In other words, the pizza shop is paying 41 percent more for these CNP transactions. Add other variables, such as an increased number of transactions per day, and the savings with CP transactions will only increase.
In the highly cost- and price-competitive restaurant industry, that argument alone makes a strong case for moving to CP transactions. Likewise, the higher your average ticket, the higher your potential cost savings.
"At a pizza restaurant with an average order ticket of $20, the total base rate charged to the merchant is 48 cents for CNP versus 34 cents for CP transactions. ... In other words, the pizza shop is paying 41 percent more for these CNP transactions."
Security: When customers give their credit/debit card information over the phone, there’s always a chance of those details being compromised or handled in an unsecure manner. However, with a CP transaction, the payment card never leaves the customer’s sight, and a payment terminal or mPOS device allows the customer to complete payments via EMV chip & sign or EMV chip & PIN. Both of those procedures can quickly verify card authenticity thus providing stronger protection to the consumer and the sale itself.
Improved customer experience: When offering CP transactions via mPOS solutions, your staff can better engage with the customer while delivering your product or service. This helps relay a better image of your brand and is thus more likely to convert one-time customers into repeat buyers.
Up-selling opportunities: A CP transaction gives your staff the opportunity to up-sell additional products or services while collecting payments. So if we go back to that pizza delivery example we discussed earlier, you can see where this capability would allow drivers to sell drinks or other items, as well as collect payment on the spot. This potentially increases revenue while adding further value to the delivery or service experience.
mPOS: A great way to reduce CNP transactions
Restaurateurs can easily reduce the number of their business's CNP transactions (and the resulting fees) through the help of mPOS solutions that help bring payment processing to the point of delivery. These types of solutions provide support for secure payments through the use of EMV chip & sign, EMV chip & PIN, magstripe and NFC/contactless methods.
With mPOS, wireless payment devices are often combined with tablets or smartphones to give associates or delivery drivers a relatively effortless way to collect payment at the time and point of delivery. Typically, they are highly portable, lightweight systems that can be easily integrated with existing software and applications that make it easier to retrieve customer information and order details during payment.