As part of a digital transformation strategy at Hampshire Cultural Trust, I have recently rolled out a new POS system across 15 arts and museum venues. This project was implemented alongside two new ticketing providers for museum admissions and arts events, plus the launch of six new websites and an online donations platform.
Subsequently our payments strategy (or lack of) was thrown into the project mix. This article explores just a few of the technical and financial considerations you’ll need to explore when approaching a POS, ticketing, website or ecommerce project.
If you’re new to thew world of payments, a great guide of who’s who in the UK payments industry can be found here.
TL;DR – the world of payments is crowded, complicated and often filled with payment jargon. Unless you are classified as a high volume business, your choice of payments provider will be based upon a range of compromises across a few key areas.
Online, counter-top or both
Most organisations in the arts and culture sector have a variety of touch points with their customers. Some payment providers can provide options for both online and counter-top, but there is often a compromise in your choice of POS or ticketing platform.
If you’re sticking with your existing POS or ticketing platform, you’ll need to peruse their list of integrations and payment partner(s) to understand what is technically feasible.
Some brands exist as a dedicated online payment platform, such as Stripe. Online payment providers are excellent at what they do, particularly for selling digital products or subscriptions.
However, this means running your online transactions in parallel with your counter-top transactions in venue. Although there are multiple providers to manage and reconcile, this is a perfectly normal payments setup – your customers will get the best experience when purchasing tickets or products online.
Technology and integrations
Another important consideration is the availability of payment providers across your existing technology platform(s). There are a plethora of payment machines available to own or rent, most of which are determined by your choice of POS and hardware.
For example, iZettle is a counter top payment provider but their card machines only work with smartphones and tablets. This means you need a decent WiFi or mobile phone signal. If you have a fleet of iPads across your organisation, this is a relatively painless approach to accepting card payments in venue.
Of course, if you run your POS on PCs or purpose-built hardware then you won’t be able to use iZettle without a smartphone or tablet. You would therefore need to consider a traditional payment terminal, often referred to as a PDQ or card machine.
Payment terminals come in a variety of flavours, with the biggest decision based around its integration capabilities.
Integrated vs. non-integrated
Most payment terminals used by small businesses are non-integrated. This means the card machine has no connection to the POS and requires manual entry of the amount to be paid. Non-integrated payment terminals will often run software provided by your merchant bank.
This is a perfectly normal setup however it does come with the side-effects of potential human error when inputting amounts, and also creates more admin for the cashing up process at the end of the day.
Integrated card machines are defined by their direct link to a POS. This means that when you hit pay on your POS screen, the amount due will be sent to the card machine so the customer can pay immediately. This reduces the chance for human error and can be reconciled automatically by your POS – both excellent benefits realised by your front of house staff.
Further reading on integrated and non-integrated machines can be found here.
POS and ticketing platforms
Integrated payment machines become more complicated when your choice of POS and ticketing platform(s) are brought into the fold. You might have the perfect ticketing solution, but the choice of payment provider is limited and expensive.
This has a knock-on effect. Your choice of POS hardware, ticketing partner, e-commerce platform, CRM, donations platform and possibly your website CMS are all part of the payments provider headache. Inevitably, compromises must be made – a good reason to bring multiple areas of expertise round the table.
An interesting observation is that modern self-service ticketing companies such as Eventbrite or Universe are building their business on volume – perhaps not too dissimilar to ticket agencies of old. Nevertheless, a small percentage earned on every ticket transaction is a sound business model for growth, so it’s in their best interest to limit payment providers and develop relationships with those they choose to adopt.
Contracts and rates
A frustrating element with traditional payments providers such as Worldpay or Paymentsense is that they require an individual contract per card machine, which in turn is linked to an MID (merchant ID).
This generates a mountain of admin if you need to switch provider, particularly if you operate a multi site organisation. Conversely, quick-start providers such as Square or iZettle require very little information to get started as no contracts are necessary. You will however need to verify your identity, and you pay for the privilege in rates.
A few brands and rates which were considered as part of our digital transformation project can be foudn below:
- Stripe 1.2% +0.20p per transaction
- PayPal 3.4% to 1.9% + 0.20p per transaction
- iZettle 1.75% per transaction
- Square 1.7% to 2.5% per transaction
- Shopify 1.6% to 1.9% +0.20p per transaction
- PaymentSense 0.4% – 0.9% per transaction
As a charity we accept donations in a multitude of formats, so when building our new website a fundraising platform was required to accept donations and link to a fundraising CRM.
Our chosen platform Donorfy has existing integrated payments options with Stripe and GoCardless for one-off and monthly recurring donations. This setup however does not include PayPal, which is still considered by many to be the easiest method of making a payment online.
Although the processing fees are quite high, PayPal offers to double donations received through its PayPal fundraising page and app on Giving Tuesday. In 2017, PayPal users donated $64m.
Our payments journey wasn’t particularly difficult, but the whole process required many hours of administration and fag-packet calculations.
If you are looking at a new payments provider, consider drawing upon the expertise of finance, marketing and operations expertise to get a balanced flavour of what’s out there, and most importantly, to learn how your decision will impact areas of your business other than the bottom line.