How the world can change. Not many people alive today remember a time when credit cards were only associated with the wealthy or with companies that gave them to traveling executives to cover their expenses. Nowadays, in many countries, it seems almost strange to see anyone paying for goods or services by any other means.

Credit cards offer a lot of conveniences. They're small and very portable. The holder also has a little more security in not having to carry cash. By the same token, the merchant also reduces the amount of cash held on his premises. In the unfortunate event of a robbery, there is less to lose.

They also offer a credit line. Most credit cards offer repayment terms of as little as 10% per month of the outstanding balance. The interest rate is usually very high compared to other types of credit. Cards settled in full are often interest-free.

The history of credit card transactions

The concept of acquiring goods or services on credit hasbeen around for more than 5,000 years. Mesopotamians used clay tablets torecord trade transactions with the Harappan civilization. However, creditcards, as we know them today only really took off early in the 20th century.

In 1914, Western Union launched “Metal Money”. This was astamped steel card that allowed customers to send telegrams but only pays forthem later. Then 1946 banker, John Biggins, issued a charge card that could beused within a two-block radius of his bank.

Only a few years later, in 1950, businessman John McNamarawent to dinner at Major’s Cabin Grill in New York. When the bill was presented after the meal, McNamara realized he’d left his wallet at home. He signed anote to promise he would return the next day to pay his bill. This experience inspired McNamara to create the Diner’s Club.

Until 1958, all the existing cards were charge cards, meaning that the entire balance had to be paid at the end of each month. ThenBank of America launched BankAmericard. The card came with a $300 credit limitand something entirely new. It also offered revolving credit, allowing the holder to pay only a portion of the balance and carry the rest forward.

In 1969, IBM engineer Forrest Parry invented the magnetic strip that propelled credit cards into the digital era. The next major revolution in credit card technology came in the early 1990s when the EMV chip and pin system was developed. This was a collaborative project between Europay, Mastercard, and Visa. This introduced dynamic encryption and a whole new level of credit card security.

Then, as was inevitable, credit cards became completely digital. And virtual. It is either just a number and security code or a QR code on a handheld device. This, along with continual improvement in communication and security technology has brought us to where we are today. Credit cardtechnology on plastic, or in the air around you.

Standard credit card transaction fees around the world

There’s no such thing as a free lunch. This applies to the credit card industry. The convenience of offering and accepting payment by credit card comes at a cost. Although the cost of a credit card transaction is levied against the merchant, there are instances where some or all this cost gets passed on to the customer.

The credit card fee consists of several components

·       Interchange fees. Charged by the card network such as Visa, Mastercard, or American Express. This is an amount of money paid by the merchant's bank to the customer's bank. It covers the cost of potentially providing short-term, interest-free credit to the customer, the risk of fraud, and the cost of rewards programs.

·       Assessment fees anddues. This is a fee charged by the card network and is usually a percentage of the total monthly transaction value. It is a fee paid for the use of the network brand and for using their payment network

·       Acquirer fee. This is a fee charged by the payment processor for the acquiring bank. It covers the costs of authorization, interbank settlement, and reporting.

How is blockchain disrupting the transaction fees industry

Blockchain is a peer-to-peer asset exchange technology. Simply put, this means that an asset travels directly from the seller to the buyer and the compensation, in whatever form, in the opposite direction. There are no intermediaries. And slices get taken off along the way.

The average credit card transaction involves as many as four intermediaries other than the buyer and seller. All of them take a fee. Anything ranging from 0.1% up to more than 2%. This all adds up to a total cost to the merchant of as much as 1.5 to 3.5%.

In contrast, with blockchain technology, there is only the exchange platform fee. This varies depending on the platform. It may be a fixed monthly fee irrespective of transaction volumes or values, or it may be anominal percentage fee per transaction. Either way, blockchain will allow the cheapest credit card processing for small businesses every single time.

Blockchain transactions are a lot faster than conventional credit card transactions. The simple reason is that the data transfers only between two points. Conventional credit cards approvals can pass between as many as six points.

Blockchain is substantially safer than credit card data transfer. Although credit card data is encrypted and considered as safe as itcan be made, blockchain is the Fort Knox of data security. It is impossible to amend a block of data. Any attempt to change the data creates a new block. The tampered block remains intact.

How can your business benefit from blockchain-based products?

Blockchain is here to stay. It is an important development in the future of finance. Let’s have a look at a few reasons why you should embrace it

·      Firstly, as we have seen in the previous section, you will be able to save on fees. This benefits both your business and your customer as it improves your margins.

·      Faster processing times mean less waiting time and frustration for the customer, and you reduce the risk of customers walking away.

·      More secure transactions protect both your business and the customer against loss in the event data is intercepted.

·      A big plus is that you can accept cryptocurrencies as payment. Crypto is gradually but inexorably gaining traction as a mainstream currency. Businesses that cannot accept crypto will eventually suffocate.

Companies like Elly provide the cheapest credit card processing for small business

Elly has the products and the systems to fulfill all the promises of blockchain credit card processing and crypto payments.

·       The Elly Point of Sale (POS) solution can accept almost all the major existing payment methods. All on one single handheld device. Payment can be accepted in several cryptocurrencies too. Funds for crypto transactions are credited almost instantly in your local currency. You do not have any risk of crypto price volatility.

·       Elly POS can come with integrated cash register software. It eliminates the need for multiple devices. The entire transaction takes place on a single device.

·       Elly POS devices can display advertisements while a transaction is processed. Advertising revenues earned can offset some or all of the costs of the Elly solution.

·       Elly POS allows you to launch your loyalty programs and customer satisfaction surveys to improve your customer retention.

All-in-all you have nothing to lose and everything to gain with an Elly solution.