Card fees on a large vehicle deposit
Why a percentage card fee bites hardest on a vehicle deposit, which cards cost more, and how a dealer can take big payments by bank transfer instead.
By Achekam · · 5 min read · For Automotive businesses in South Africa, Nigeria, Kenya
A buyer has chosen a car and wants to secure it today. They reach for a credit card and offer to put the whole deposit on it. For the salesperson, it is the easiest close of the week. For the dealership, it may be the most expensive way that money could have arrived.
Card fees are easy to ignore on a parts sale or a service invoice. On a vehicle deposit, or a full cash purchase, the same fee structure produces a number that someone in the finance office will eventually notice. This article explains why, and how a dealer in South Africa, Nigeria or Kenya can steer large payments to a cheaper route without losing the sale.
A percentage fee on a big number
Investopedia describes the interchange fee as the fee a merchant pays when a customer pays by credit or debit card. It goes mostly to the card issuer, is set by the card networks such as Visa and Mastercard, and is usually calculated as a percentage of the transaction plus a fixed fee.
The important word is percentage. A fixed fee is the same whether the customer buys wiper blades or a bakkie. A percentage grows with the amount, so the cost of accepting a card scales directly with the size of the payment.
Investopedia's worked example is American, but it shows the mechanics clearly. On a $100 card sale at a 2% interchange rate, the merchant pays $2, of which $0.25 might go to the merchant's bank, $0.15 to the card network and $1.60 to the card issuer, leaving the merchant $98. Investopedia notes that actual rates are set by the networks and vary. No equivalent public figures are given here for South Africa, Nigeria or Kenya, so ask your acquiring bank for your own merchant fee schedule and read it with a vehicle deposit in mind.
Why some cards cost more than others
Not every card swipe costs the same. Investopedia lists the factors that move interchange: the type of card, debit or credit; how it is used, such as chip, PIN or tap; whether the transaction is online or in person; and the merchant's industry. It adds that credit cards generally carry higher interchange fees than debit cards, and that premium cash-back and travel rewards cards charge high fees.
That last point matters in a showroom. The customer most likely to offer a premium rewards card for a large deposit is often the one whose card costs the dealer the most to accept. The customer is collecting points; the dealer is funding them.
For a fuller explanation of how the fee is built up, Investopedia's guide to interchange fees walks through the parties involved and the factors that drive the rate.
Bank transfer with a reference
For a large deposit, a bank transfer is usually the cheaper and cleaner route. The customer pays directly into the dealership's account, the amount arrives in full apart from whatever your own bank charges for receiving it, and the payment reference ties it to the deal.
Two practices make transfers safe:
- One reference per deal. Give the customer a reference that names the vehicle or the deal, not just their surname, so the deposit cannot be confused with another buyer's.
- Cleared funds before release. A screenshot of a transfer, or a proof of payment PDF, is not money in the bank. Release nothing until the amount appears on your bank statement.
When the deposit is invoiced, Achekam's pay page can show the business's bank details and a payment reference, and a staff member marks the payment received once it shows on the bank statement. Each bank account in Achekam takes one currency, which keeps rand, naira or shilling deposits in the account that matches them.
At the counter: recording the transfer
Some buyers prefer to pay on the spot, from their phone, while standing at the sales desk. If the dealership uses Achekam's till for counter payments, the till shows the business's bank details and a reference for a bank transfer, and the sale is refused until the cashier records the bank's reference. That stops a transfer from being recorded on trust alone.
The routine at the desk:
- Ring up the deposit and choose bank transfer.
- Show the customer the bank details and reference from the till.
- Wait for the payment to reach the dealership's account, checked through your banking app by someone authorised to see it.
- Record the bank's reference at the till to complete the sale.
Card slips from the terminal
Sometimes a card is the right answer: a small holding deposit, a buyer from out of town with no other option, or a customer who simply will not wait. When that happens, the payment is taken on the bank's terminal and then recorded at the Achekam till by the cashier from the terminal's slip, because the till is not connected to any card machine.
Keep the merchant copy, check that the amount on the slip matches what was recorded, and make sure the card payment and the deal it belongs to can be found together later. A large card deposit is also a large potential dispute if the deal falls through, so the paper trail matters more than it does for a service invoice.
Writing the policy down
A dealership that decides this case by case will make inconsistent choices under pressure. A short written policy helps the sales team:
- Bank transfer is the preferred method for deposits and full payments above an amount the dealership sets.
- Card is accepted for smaller amounts, or above that level only with a manager's approval.
- No vehicle is released against a proof of payment alone.
- Every deposit carries a reference that identifies the deal.
For how deposits and finance house settlements fit together, see deposits and finance house payments, and for transfers at the service desk, read bank transfers at the service counter.
The sale is the same whichever way the deposit arrives. The difference is how much of it the dealership keeps.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
