“Mobile Payment Solutions” Article provided by John Birse and the Institute Of Certified Bookkeepers Sept 2016
Help Your Clients Get Paid Quickly and Efficiently
At the recent Council of Small Business Australia (COSBOA) Summit it was reported that Australia has one of the worst records in the world for business to business (B2B) payments of outstanding debt. Peter Strong (COSBOA CEO) is mounting a campaign for a prompt payment protocol, (see Smartcompany article), with a 30 day payment code. While big business, (those with over $10M turnover), are the main culprits, we as bookkeepers can greatly improve the cash flow of our clients by introducing them to efficient ways of getting paid faster.
The first thing a business can do to improve the payment of their invoices is obvious, but often lacking – they need to ask their customer for payment! This can now be done easily in the field with cloud based accounting solutions, producing invoices that can be emailed to the customer immediately the service or product has been delivered, but failing that a properly designed invoice book will do the trick. Waiting days or even weeks to send an invoice to a customer is a sure way to be put at the bottom of the pile when the customer is working out who they should pay.
Take Advantage of New Payment Systems
The average customer has less than $20 cash with them and payments by cheque are becoming increasingly rare, so unless your client can present their customer with a facility to take credit or debit card payment they may have to wait a long time for their money. In the past these facilities came with an approval period, monthly fees and up to a three year contract that locked your client into a monthly fixed fee along with a transaction fee of about 3%. By shopping around you can now find solutions that are easy to set up and even work with your accounting program to close off the invoice and draw customer details from the software, reducing the time and potential errors of typing this information in at the time of the sale.
Some of the Mobile Payment Solutions Currently Available
I found the Square to be the easiest to set up (although they had problems in recognising a trust business entity in setting up my account). I was able to get around this by using my company details. I found plugging directly into the smartphone or tablet’s headphone socket more reliable than the bluetooth synchronisation used by other solutions.
Square is available from their website or from Officeworks, Bunnings, Harvey Norman and Apple Stores for $19 and there are no fixed contracts or monthly fees. Square’s processing fee is 1.9% (inc GST) per inserted, swiped or manually entered transaction and 2.5% for each remotely paid invoice. The free app operates just like a mobile POS system with the ability to email or SMS a receipt as well as sending your own invoices. It takes both credit and debit cards as well as AMEX, but not EFTPOS. Square works independently of banks with one way integration to Xero to automatically create accounting entries for your daily Square sales and with QBO through a “Sync with Square” app that imports daily Square sales data into QBO.
Banks are also providing their own mobile payment systems and the ANZ have a special product coming out in November 2016 that will integrate with accounting software and online apps.
There is no cost for the current FastPay plug in reader but a $5 a month card reader rental fee, 2.3% (inc GST) merchant fee, (minimum of $10 each month), and a $0.30 debit card fee for each EFTPOS transaction.
You need to be approved for an ANZ merchant facility and have an ANZ business account to use the app. There is a $130 closure administration fee and a $30 chargeback fee.
MYOB have partnered with Bendigo Bank to come up with a mobile reader that accepts ‘chip and PIN’, and ‘swipe and PIN’, and PayWave and PayPass enabled cards and EFTPOS. The device connects to Apple or Android smartphones or tablets via bluetooth and requires a merchant authority which MYOB takes care of, but does require some form filling and authorisations, which may take a few days.
MYOB tells us that 64% of Australians prefer to pay by card and that each month 5.1 Million Australians walk away from a sale because they can’t pay by card. The reader costs $247.50 and transaction fees are 1.95% (inc GST) with a $0.30 charge for each EFTPOS transaction. There are no monthly fees or fixed contracts and the MYOB On The Go app automatically updates your accounting software – closing any open invoices that have been paid using MYOB PayDirect.
Pay RIGHT AWAY
Following Ingogo’s success with wireless terminals in taxis they invested time with Xero to come up with the best integrated solution available. Pay RIGHT AWAY users can use Xero client details such as customer name, email address and Invoice item as prefill for the card payment made the next business day.
I have used Pay RIGHT AWAY at ICB Network Meetings to take Tap & Go payments from guest’s credit cards after creating client and item details in Xero. After payment a receipt was sent to the guest; the open invoice in Xero is then automatically closed. This two way integration saves time and reduces typing errors.
Currently the terminal is provided at no cost with a transaction fee of 1.65% inc GST. There are no contracts or monthly fees and works via a bluetooth connection on Apple or Android Smart Phones and tablets for credit and debit cards along with EFTPOS.
PayPal Here Card Reader
An increasing number of businesses provide payment options through their websites using ecommerce facilities with PayPal acting as the de facto internet bank. I have seen clients increase their online sales by offering PayPal payment facilities because of the convenience and security provided.
To use the PayPal card reader, you will need a Business or Premier Account along with the PayPal Here app which is available for the Apple and Android platforms. The card reader comes as a Tap and Go ($149 inc GST) or Chip and Pin Go ($99 inc GST) device and connects via bluetooth, letting you accept payments by American Express, Visa and MasterCard credit and debit card, and by PayPal. There are no monthly fees or hidden costs; merchant fees for domestic PayPal sales start at 2.6% plus $0.30 per transaction with Contactless and Chip and PIN card payments 1.95% per transaction. Xero, SAASU, and QuickBooks Online allow you to add a ‘Pay Now’ button to invoices so that clients can accept credit cards, debit cards and PayPal payments in more than 25 currencies.
The Next Generation—Near Field Communication (NFC)
Adding or connecting devices to your Smart Phone and using plastic cards are functions that are already becoming as redundant as writing out a cheque and mailing it as payment. Apple and Google have released their own contactless payments process that will initially work with contactless terminals in retail outlets but eventually could work in a B2B environment. Security and identity theft are a primary concern and the use of finger prints and two step authentications are being used to address this. We can expect to see more seamless linking of transaction data with initiatives taken by the Digital Council of Australia where Matthew Addison is representing ICB with the eInvoicing project.
With the proliferation of mobile devices including wearable technology, Apple have provided what they call Near Field Communication antennas in their more recently released products. These send a unique number for each purchase so that credit card details and personal information are not used. Apple have successfully avoided having to negotiate with the banks but have a relationship with the ANZ Bank and American Express. There are no set fees but the seller may pass on the merchant fee and related terminal costs, but this is now limited to cost following an ACCC ruling.
You can download the free Android Pay app on Google Play and as you are not handing over your credit card, your card information is kept secure with industry standard tokenization. For payments over $100 you will need to enter a PIN at the terminal. This technology is currently aimed at the retail shop market but I can see this being a very attractive and more secure way of allowing our small business clients to receive payments from customers where they would normally have waited weeks or even months for payment.
The gadgets can be used either on their own for receiving payments or can be integrated with the software.
If using the device for receiving payments only, the services can often be used immediately upon receiving the device. This means that the payment, once received into the bank, will need to be manually matched to an existing invoice or manually allocated to an income account for ‘cash’ payments.
If integrating with accounting software, this can take a little longer to set up, a few days or more. Once integrated, the payment will be recognised by the software and automatically allocated to the correct invoice or account.
Services that are connected via a bank tend to take longer, especially if you don’t already have an account with the provider. There may be some delay to receive authority from bank products and to then activate the system. The timing involved may also be dependent on which bank the client’s accounts are with
Hopefully the bookkeeper is asked for information or advice before the client enters into a contract for this kind of service!
Although this may be really useful for some clients, for example, those who are on the road visiting clients on site, or service providers who have many clients visit their premises, be mindful that there is some hype out there about these products. Not all business operators need this solution, so don’t push it onto businesses that really aren’t going to use it. Assess whether having a mobile payment solution will really assist the business owner to reduce debtor days.
A reminder that regardless of the method of payment, the key to getting paid on time is to issue invoices, provide them to clients, have the terms of trade clear on the invoice (or other documents), and to follow up on payment in a timely and professional manner.
Our thanks to John Birse – ICB Director and Jim’s Bookkeeping Franchisor for providing this article.