infinitechilli e n t e r p r i s e s Methods of Conducting Rental Transactions Membership Cards, Credit Cards. Risks & Benefits

Transcription

1 infinitechilli e n t e r p r i s e s Methods of Conducting Rental Transactions Membership Cards, Credit Cards. Risks & Benefits

2 Contents This document outlines: Methods of conducting rental transactions, Risks & Benefits: Membership Card Credit Card Risk of Theft & Late Returns What is preauthorization Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 2

3 Methods of Conducting Transactions Membership Card (accepts cash) Membership Card (no cash) Credit Card Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 3

4 Membership Card - machine accepts cash Membership Card (accepts cash) Rental process: Customer signs up for Membership Card this will need to be done at a location where details can be taken. Operator verifies details and issues membership card Customer Rents Movie(s) Customer selects the movie(s) to rent Customer then swipes membership card Machine informs customer of the rental amount, and deposit required Customer inserts cash into the machine, the value is stored on the membership card. Movies are dispensed Customer Returns Movie(s) Customer swipes membership card Returns movie(s) to machine Machine calculates rental charge and deducts amount from stored value on card. Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 4

5 Membership Card - machine accepts cash Risks: 1. Machine is carrying cash, making it an attractive target for vandals. 2. Machine will need to be serviced more frequently, to remove the daily cash takings, increasing the cost of operation 3. Need to signup as members before using the machine, limits the placement of the machine, potential customer base and increases costs of operation 4. Will customers be willing to pay a deposit? 5. How much of a deposit can be taken? 6. Removes the impulse rent, and also makes it a longer process for a customer to rent movies. Benefits: Can run loyalty schemes targeted for each member Better understanding of which demographic is using the machine, and how they are using the machine Can rent to population of the market that do not have credit cards. Once initial membership sign on is done, members can top up their cards at the machine itself. Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 5

6 Membership Card - machine does not accept cash Membership Card (no cash) Rental process: Customer signs up for Membership Card this will need to be done at a location where details can be taken. Operator verifies details and issues membership card Customer will need to load the card with credit. Customer Rents Movie(s) Customer selects the movie(s) to rent Customer then swipes membership card Machine informs customer of the rental amount, and deposit(credit) required If there is sufficient credit on card, movie(s) are dispensed Customer Returns Movie(s) Customer swipes membership card Returns movie(s) to machine Machine calculates rental charge and deducts amount from stored value on card. Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 6

7 Membership Card - machine does not accept cash Risks: 1. Need to signup as members before using the machine, limits the placement of the machine, potential customer base and increases costs of operation 2. What happens if there is insufficient credit on a customers membership card? Where do they fill up? 3. Will customers be willing to pay a deposit? 4. How much of a deposit can be taken? 5. Removes the impulse rent, and also makes it a longer process for a customer to rent movies. Benefits: Less risk of vandalism as the machine is not carrying cash Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 7

8 Credit Card based transactions Credit Card Rental process: Customer Rents Movie(s) Customer selects the movie(s) to rent Customer then swipes credit card Machine informs customer of the daily rental amount Machine checks validity of credit card, and preauthorizes an amount If there is sufficient credit on card, movie(s) are dispensed Customer Returns Movie(s) Returns movie(s) to machine Machine calculates rental charge and deducts amount from credit card. Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 8

9 Credit Card based transactions Risks: 1. What happens if there is insufficient credit on a customers credit card? 2. What about stolen credit cards? (see document Credit Card Processing) Benefits: Capture the impulse rental market More convenient rental process than having to signup as members first Limits the risk of theft as preauthorized amount can be taken Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 9

10 Risk of Theft & Late Returns With any rental system there is a risk of theft & late returns, whether done through a machine or through a physical store. The risk of theft and late returns is minimized in the following ways: Physical Store: Typically customer s details are taken. In the event that the customer does not return the stock, their details are passed onto a debt collector (such as Video Defaulters) or store operators chase up the customer for the stock and lost income. Membership Card based Machine: The operator has 2 options: 1. Require each membership card to have a certain amount taken as deposit. This makes it easier to recover funds however may limit the number of potential customers. 2. Chase up the member just as in the physical store scenario. - Credit Card based Machine: The machine preauthorizes an amount. In the event that the movie is not returned or is returned late the machine can automatically deduct the amount from the preauthorized amount. Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 10

11 What is Preauthorization? Preauthorization is a system currently used in various circumstances in particular with hotels. When you check into a hotel, the hotel takes a swipe of your credit card. At this stage the hotel reserves an amount from your credit card (preauthorization amount). This amount is not actually charged to you, but is reduced from your credit limit. At the point of checkout, the hotel will determine the appropriate charge and debit this to your credit card. Any remaining balance on the initial preauthorization amount is returned to your credit limit. It is a similar system that will be used for preauthorization of rental amounts from the machines. Copyright InfiniteChilli enterprises Pty Ltd Methods of Conducting Transactions 11