Carry trade moves on

Mark Fenton-Jones, AFR - Tuesday 11 March, 2008

Small businesses that cannot afford the time to send out invoices or chase up outstanding payments and don't want to lose potential customers are turning to wireless-enabled portable payment systems to speed up their cash flow.

Motorcycle clothing importer Simon Siounis, who established Shogai Imports three years ago, says his cash flow has increased dramatically since he started using a portable payment system (PPS) at industry trade shows.

In the past when he only accepted cash, he often lost interested customers who walked away promising to get cash from an ATM but he never returned.

But since 2006, he has used a Mint PPS at the 10 or so trade shows where his business has a stand and he can take in $12,000 to $25,000 over a three-day weekend.

"It's definitely improved my cash flow, because without it you could almost bet that not even half the customers purchasing things on cash would go to an ATM machine and come back to the stand," Mr Siounis said.

"We just saw that as soon as we started using it, the amount of money coming in came so much faster than we had had at any other trade show where we had only accepted cash."

In his experience, the main advantage is that he can accept payments by credit card, or Visa and MasterCard debit cards, at the show, get an immediate authorisation on the transaction and print out an itemised tax invoice for the customer.

"It got us that much money sooner so that we were able to purchase more stock and get it turned over a lot quicker. It's something I would have day in day out with any other business from now on," he said.

Portable payment systems that incorporate smartphones are expected to become more widely used as the popularity of smartphones, including the Blackberry or Microsoft Windows-based mobile devices, continues to grow.

US research firm In-Stat predicts that smartphone numbers will increase at an annual compound growth rate of more than 30 per cent and take a larger share of the overall phone market that is growing in only single digits.

Another prediction is that they will become replacement for laptops.

For small businesses and sole traders, PPS will provide another way to control cash flow. It could be used in many situations.

For example, a plumber is called in for an emergency where the customer does not have enough cash.

Afterwards, when the plumber gets back to their office, they have to issue an invoice and then chase up payment if it were not to be immediately forthcoming.

If the customer writes a cheque or makes a credit card transaction that is manually swiped, funds are not transferred into the business account straight away.

This method also requires the assumption that the cheque or credit card is not fraudulent.

Using a wireless payment system, the transaction is entered onto the Blackberry, for instance, on which price lists, invoicing data and customer information has been downloaded.

The customer signs the invoice with a styles on the Blackberry's touch screen and the information is transferred to a Bluetooth-enabled card reader.

The reader not only swipes the credit card to authorise payment, with funds immediately settled into the plumber's bank account, but also prints out a signed tax invoice if approved.

Since November, both Optus and Telstra have offered bundled portable payment systems.

Optus partnered with Mint Wireless so that small business users can get an Optus-approved personal digital assistant (PDA) or Blackberry with connection and data plans wrapped up with a Mint pack that includes hardware, software and subscription.

Telstra launched its T-Pad using Card Access Services software that makes on the spot credit card payments.

Elizabeth Aris, executive director in Telstra's Maxi Manager division, said that it could be used on Windows and Java-based phones, as well as smart and normal phones.

The hardware and authorisation process was similar to Mint's, although the T-Pad did not print an invoice, sending it to the customer by SMS.