The Pellucid Perspective - August 2019 - 4

BARTER 2.0

Caddie when a course selects that payment option. I am told that
it is coincidence that the platform they use also recently became
a "preferred vendor" for the NGCOA.
There are a number of similarities between the Tee Sheet/
POS market and the world of credit card processing. As most
of you know, we have dissected data from a lot of POS systems
and studied credit card processors extensively when PCI Compliance issues affected golf course POS systems. If there is one
over-riding truth to impart; it is that one POS platform works
better in some situations than others and vice-versa. The same is
true for credit card processing.
In any event, these recent trends indicating additional consolidation in the Tee Sheet/POS marketplace and the use of credit
card processing as a method of payment for those services meant
I had to brush up. The payment industry technology keeps advancing, especially in the area of mobile payments - most POS
platforms and some mobile app providers are trying to make it
easier for the consumer to pay "remotely". These payments carry
higher transaction fees than typical "card present" transactions;
but it's also pretty clear that you have customers that want mobile
payment options. In the case of beverage carts, prepaid greens
fees and recurring payments; having more payment options may
improve revenues.
Also, the mix of cards presented for payment are changing.
Traditional "qualified" cards are being replaced by "mid-qualified"

DISCOV ER

cards with points and/or cash back features. Those cards carry
higher interchange rates and raise processing fees for the course.
The "tiered pricing" programs were starting to be replaced by "interchange plus" pricing in reaction to this influx of mid-qualified
cards several years ago and offered savings - ETS used mostly
"tiered" pricing and got mad at me when I pointed this out several
years ago. We suspect that the FBI investigation letter Pellucid
and others using ETS got was related to some common practices
in the interchange rates used to calculate mid-qualified fees using
the highest mid-qualified rate even if many mid-qualified cards
carried a lower rate. The actual interchange rates from Visa and
Mastercard are fixed every year and there are about 11 pages of
various card types all carrying different interchange rates.
The interchange rates for Visa/MC are the basis for the various credit card merchant processing options that simply "mark
up" the base rates set by Visa/MC. The spread created by the mark
ups is essentially the operating income generated to provide merchant services. The various merchant processing programs can
and do vary greatly in terms of interchange rate and per transaction fee mark ups.
With the advent of mobile payments, well known companies such as Square and Stripe developed as processing options.
Square and Stripe apply a "flat rate" to all transactions that range
from about 2.75% - 2.9% sometimes plus the base per transaction
fee. While there are lower interchange rates for supermarkets, gas

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August 2019
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The Pellucid Perspective - August 2019

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