Cardis to Bring Low Value Payment Platform to the U.S.
More and more consumers are making the switch from cash to cards and mobile as their preferred payment method. And while this is good news for the industry, it’s causing some issues for low value ticket merchants.
Cardis-International, which will be bringing it’s low value payment platform to the US in April, is looking to make it much easier for US merchants to accept small credit and debit charges. Payment Week recently sat down with Cardis CEO, Nebo Djurdjevic, to discuss some of the problems with accepting low value payments, and just what Cardis can do to help.
For larger retailers, interchange and transaction fees (the costs associated with actually accepting the payment) are relatively low, typically around two percent of the total transaction, plus a ten cent charge from both the issuer and the processor. When a merchant is selling something at one hundred dollars a pop, $2.20 isn’t going to break them. However, for merchants working with much smaller transactions (under ten dollars) that fixed fee of twenty cents can really begin to eat into profits.
As Djurdjevic put it, “If someone buys a cup of coffee for two dollars, the percentage taken out would come out to about $.04, which is fine, but then the merchant is also charged 20 cents on top of this. Twenty cents on a two dollar transaction is a ten percent fee. Most quick service restaurants work on a three percent profit margin, so obviously, this is a problem.”
Why no one had found this to be much of a problem before, it seems, is because even though larger retailers would accept card payments for any amount, the vast majority of small payments were made in cash. “When you look at credit and debit networks, they all started in the ‘70s, when magnetic stripe technology was deployed for cards and electronic payment terminals,” Djurdjevic explained. “At the time, people were using cards only for larger payments. But over the years, payments have been getting lower and lower, and now people are pushing one and two dollar transactions through these old rails designed for much larger payments.”
This is where Cardis comes in. According to Djurdjevic, “At Cardis, our technology aggregates all these small transactions, and then pushes them through the rails as a single, larger transaction.”
Without getting into the nitty-gritty, Cardis essentially holds low value payments (like individual song purchases or your favorite dollar menu items) and then, after a certain amount of money or time is reached (which is up to the merchant) Cardis sends these transactions through to be processed as one large sum. Rather than paying twenty dollars to sell one hundred songs, a merchant can now sell these one hundred songs for twenty cents. It doesn’t take a mathematician to see the benefits there.
Cardis will be launching this service in the U.S. sometime in April or May, and already has at least one major retail brand looking to utilize their system. Their initial focus will be, as described by Djurdjevic, “Digital content, mobile apps, and Ecommerce. We’ll be working with businesses that have very engaged customers who utilize a large number of low value transactions, particularly in music, games and publishing.”
Cardis is offering some serious savings to low value ticket merchants – and with fast food restaurants beginning to jump into the mobile payment game, it seems as though Cardis may have timed their move to the U.S. perfectly.