Your redemption agreement regulates the cost of your card transactions and is a prerequisite for you to be able to charge cards in your restaurant. Many don’t think to negotiate their redemption contract, which often ends up with them paying more than they should. This blog post looks at how to choose the right redemption contract (and save money!).

What is a redemption agreement?

Your redemption agreement (or card redemption as it is also called) determines the cost of each transaction on the card terminal. What is important to consider when choosing a redemption agreement is that it should be adapted to the payment methods of the guests. You can save a lot of money just by taking the extra time to make sure the redemption agreement is right for your restaurant. How do you choose the right one? We’ll tell you about it here!

How do I save money with the right redemption agreement?

What is the distribution of card payments among your guests? Maybe you sell a lot of business lunches and are high on debit cards? Or you have a restaurant near the Norwegian border where the majority of guests pay with foreign cards. Your transactions will be cheaper if you adapt the redemption contract to what your guests pay with. Choosing a redemption contract is a bit like choosing a POS system – first of all, you need to analyse your needs.

Different suppliers will also have different pricing. One operator may charge 29 pence per transaction with a variable component of 0.6%, while another may charge 1% outright. In other words, different models can be profitable for different businesses, depending on, for example, how many bills you have per day and what the average bill is. You can work this out by looking at how much you pay for debit, credit and foreign cards. Is the distribution correct according to the redemption agreement?

If your guests pay with predominantly debit cards, you should aim for a redemption agreement with a good deal on debit – and less focus on the rest. We once saw an example of a seasonal business that was open twice a week in the summer, with 1.9 million in card sales. When they switched redemption contracts, they saved SEK 25,000 outright. Pretty decent?

Do you find it difficult to work out for yourself what is the best value for money? Ask your supplier! It doesn’t have to be someone who just offers redemption agreements either, many POS providers also broker redemption agreements (and card terminals for that matter). For example, at Ancon we can look at your annual statement or invoices to work out what redemption agreement you should have based on the mix of cards. Do not hesitate to contact us!