Dealing with credit card and 0% installment scheme

When purchasing items from your store, customers may want to use credit card installment scheme for items with large payment amount. There are 3 parties involved here :

• you (the store)
• bank
• your customer (end user)

This installment scheme works in a way where, customers uses their credit cards to pay the amount :

• banks receive payment from customers in small amounts in installments (a contract between bank and customer)
• you receive the full amount from the bank when you do a settlement (contract between you and the bank)

Credit card scheme is almost similar to a debt factoring; bank buys your Accounts Receivable for a less than your debtors value. But in this case, banks may charge a small percentage of interest / finance charge for every customer transaction (0% installment schemes exists too). This installment scheme is somewhat beneficial to you because the risks of bad debt, slow payment or fraud is transferred to the bank for a small price. Also, by giving customers an option to purchase expensive item in small payments will help boost your sales. However, the installment scheme and facility is an agreement and must be negotiated between the you and the bank. Please contact your bank on this matter.

When customers reach the cashier with their purchases and credit card, you may use 1 way to deal with credit cards and installment scheme:

On top of the credit card sales, the bank might charge the user company finance cost of a certain percentage. In this case, it is called Company Absorbed Finance Charges. Please see Card Payment Configuration.

Vouch Bank Statement with Official Receipt by Credit Card report or Cashbook.

If you detected an error; wrong amount received or no amount received at all :

1. Inform the bank.
2. Fax or send the IPP / CCT forms to the bank showing proof of receipt from customer.
3. Upon approval, the bank will debit the remainder amount into your account or send you a cheque.

Do not forget to perform Bank Reconciliation at the end of the month.