This well-documented rise in popularity for phone and card payments has a dark underbelly that hasn’t been getting much airtime.
Having a coffee followed by a short nap has been proven to improve productivity. It feels counter-intuitive to drink a coffee before trying to get some rest, but apparently by the time the coffee actually kicks in you’ll have already had your nap, so then it works to boost you on awakening, reducing that groggy feeling.
I’ve been thinking a lot about coffee recently, not just to keep me awake as we burn the midnight oil building Roqqett. I’m exploring how the soaring popularity of contactless payments impacts coffee shops and similar businesses.
It was an existing solution ready to fix a problem we didn’t know we had. It’s become an unexpected good news story for the fintech world, in the middle of chaos for most other sectors.
Tapping our card or mobile to pay has meant we could keep shopping through lockdown and beyond. At first for those elusive loo rolls, then for paint and home office furniture and, eventually, for school uniforms.
We feel like we’re doing our bit when we use contactless: social distancing – check; keeping our high streets alive – check; and taking care of our families. Contactless is helping us create a new normality that sometimes feels a bit like the old normality, just a bit more masked and sanitised.
But something didn’t sit quite right with me. I’m a tech and finance geek. I like to take systems apart and look at them from first principles. And this well-documented rise in popularity for phone and card payments has a dark underbelly that hasn’t been getting much airtime.
First the lockdown: they’re forced to close and furlough staff with no income to offset ongoing costs. Then it ended and we emerged from lockdown… only it did not really end there. Lots of new procedures were needed to open up again. Read increased costs. Capacity was reduced. Read lower potential for revenue. Footfall was down. Read actual revenue has fallen. On top of all that, there has been an increased hidden cost: contactless payments.
Nearly all customers are now paying by contactless. This results in more card payments which means higher transaction costs for merchants. For smaller value purchases such as coffees, the traditional fixed costs of card transactions mean that the implied % fee for a transaction can be over 3% in some cases. This eats into a significant chunk of the net margin and significantly reduces the profits for small businesses. This is why many small businesses such as the coffee shops and local bakeries we love did not always accept card payments for smaller amounts. Covid has forced them to.
Some clever fintech must be challenging this obviously inefficient system to deliver better service and value to their users. Nada. Nothing. Zilch. All the innovation was happening within the existing payments system and mostly online, conforming to the rules set by the card companies which maintained their dominant market positioning while giving the illusion of innovation.
So what can conscious shoppers do to support local businesses, stay safe and enjoy the benefits of contactless shopping? Choose a payment option that does it all for them, except one didn’t exist. So I’ve built it. Welcome to Roqqett. It’s different because it’s:
Roqqett contactless is properly socially distant. We can pay from up to 2 metres away.
Roqqett contactless removes the £45 limit. Better security and new technology enables us to do this.
One simple and low fee structure: 0.5% per transaction. New providers like iZettle are charging 1.75%. Older providers have mind boggling pricing with a complicated mess of up to 11 different charges. Yes, 11. I know.
It’s been approved by the FCA and you can get on board really soon. I’m not asking you to leave your bank, just use a fresh app.
For merchants we are 100% confident that in total our fees of 0.5% are lower than the combination of fees and charges you’ll pay with any competitor. We are not asking you to buy any hardware or software. Our app is free and works on your smartphone or tablet. You can leave at any time.
As a shopper you have the added benefit of having a great finance app. Simple to use across all banks. See balances, transactions and move money all in one place. And, take contactless payments as a consumer, that is a first as far as we know.
In a year when some coffee shops are spending more on card processing fees than coffee beans we’ve got the chance to redress the balance and help reawaken our high streets from their lockdown induced nap.
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