It/Telecomms advice

Getting paid can be a job in itself for mobile franchisees. Graham Hoyle of PayYours discusses the challenges facing franchisors and what to look out for when selecting chip and PIN terminals for your network

One of the biggest issues facing all mobile franchisees is getting paid as soon as the job is done. With the closure of the Cheque Guarantee Card Scheme in June, it is no longer possible to guarantee a cheque up to a specified limit by handing over a plastic card carrying Shakespeare's logo - the scheme identifier. So now, both customers and franchisees need secure ways of making and taking payments.

Cash may be king, but the truth is more and more customers now prefer to pay by credit or debit card. More and more customers seem to never have enough cash on them to pay for jobs done in their homes. Adding to this is that almost a third of consumers say they never use cheques, whilst a further 11 per cent only use them once a year, a recent MSN poll has revealed. These findings may be surprising given the recent scrapping of plans to abolish cheques, which came after a major public outcry. The Payments Council had originally planned to abolish the cheque by 2018, arguing that usage was dwindling while a number of newer, faster payment options were available. These include online, mobile card terminals and contactless card payments.

"There are many more efficient ways of making payments than by paper in the 21st century, and the time is ripe for the economy as a whole to reap the benefits of its replacements," says Paul Smee, chief executive of the Payments Council. Notwithstanding whether customers do or do not use cheques, or whether you would want to accept one, there is no doubt that banks do not want to process cheques, as this means employing staff, and staff cost money. Inevitably the costs of cheque processing will spiral over the coming years until its usage is miniscule.

For mobile franchisors who carry out work in customers' homes or places of work on a one-off basis, the only guaranteed face-to-face payment solution is taking payments by secure Chip & PIN, using a handheld mobile GPRS terminal that enables franchisees to take card payments whenever and wherever they are. Increasingly customers have become reluctant to pay by cash. They see paying by cards using secure Chip & PIN as more convenient, with added security, along with the reassurance of the insurance guarantees provided by card issuers. Now mobile workers can satisfy those customers who prefer the convenience of a card payment by credit or debit card, just like they're used to making in shops and restaurants.

But, as ever, with many and various types of merchant credit card processing schemes, comes the good, the bad and the ugly. It is important the supplier understands precisely what you as the franchisor need from such a scheme and the level of turnover being done by your franchisees - that will often be a merchant in their own rights and therefore subject to issues of frequency of usage and turnover banding, which can then determine the costs.

There are some common factors across the varying schemes that need closely looking at, not all is apparently as it seems and most schemes delicately hide the true cost of operating with them, or at least make it difficult to discover what the true costs are.

Openness is not something this sector is overly renowned for, very few have websites that clearly show the true cost of becoming one of its merchants, so contrasting and comparing one against the other is difficult and time-consuming.

Looking at the varying elements of getting a terminal, set-up fees range from free to £165, which usually covers the administration costs involved in obtaining a merchant identity, known as a MID, which is mandatory if you want your own terminal. In part it may also cover some of the risk of taking on a merchant.

There are a few good companies that don't charge set-up fees or waive them if you are part of one of their associations or affiliate partners, so it's always worth checking out what each charge as a starting point. Then, almost all want you to enter into a contract for one, two, three or even four years. I recently met a man who told me that he had been paying £40 a month for over three of his four-year contract, by the time he finishes paying he will have paid out almost £2,000 for a terminal that costs around £300! This raises the issue of terminal rental versus buying a terminal: most companies do not let you have the choice of buying a terminal, most simply want to rent it to you under a lengthy contract, tying you in for as long a period as possible.

However there are a few companies that will organise a MID for you, sell you a terminal and provide merchant processing services with no contract to tie you in and no monthly rental costs. What you will pay will be a monthly SIM cost to connect the card terminal to the mobile network and a monthly charge for transaction costs.

When it comes to transaction costs and monthly transaction minimums there are varying extremes. Some of those companies that tie you into a contract will often charge you a lower transaction rate depending upon how much you pay in terminal rental, so, for some there is a direct relationship between the length of the contract, the monthly terminal rental charge and the transaction costs. Transaction costs looked at on their own can vary from as low as 1.1 per cent to more than three per cent for standard credit cards and 11p to more than 30p for debit cards, but you can never just look at these in isolation. Some will cost you typically £20 a month minimum transaction charge, irrespective of your transaction usage.

If, as a potential mobile franchisor merchant, you are currently looking for a suitable merchant services provider; think about how much card turnover you are going to do, how often you are going to be using cards, how long you want to be tied into a contract and do you even want to be tied into a long-term contract? Look around at those that are honest and open about the service they deliver.