Payment tech influences pricing model
The new payment companies SumUp, Zettle, Square and myPOS all offer so-called blended rates. This is a single fixed percentage paid on a card transaction amount, whether the customer uses a Visa debit, Mastercard credit or American Express card.
For a very small business, it is a transparent and simple pricing model, but Samuel argues that for merchants of a certain size taking mostly local consumer cards, the interchange plus plus model offered by Yavin is better value. Yavin takes a low fixed percentage and cent margin on all transactions regardless of the card used. On top of that, merchants pay the card scheme and interchange fees going to the card networks. For local cards, these are often low. For local consumer cards, the total fee paid to Yavin is typically lower than a blended fee.
The fragmentation of the payment ecosystem and rise of account-to-account transfers at the expense of payments via the card schemes Visa and Mastercard is a development Yavin is counting on:
“With the rise of account-to-account payment methods and instant transfer, we have the hope that interchange will come down to zero in a few years. It makes our pricing and payment platform model even more relevant.”
Another development he sees is the rise of tap-on-phone – so-called softPOS – where a dedicated card machine is made redundant: “I believe paying directly by tapping a card or mobile wallet to a smartphone will dominate among very small businesses. More established businesses would still want to get a separate payment terminal,” says Samuel.