DUET for Distribution Companies
Business Context
Wholesale trade firms are a large part of the economy. They buy large lots of goods, usually from manufacturers, and sell them in smaller quantities to businesses, governments, other wholesalers, or institutional customers. They simplify product, payment, and information flows by acting as intermediaries between the manufacturer and the final customer. Often, the payment transactions are performed in cash or using postdated cash. The smart distribution scheme is applicable for wholesale companies which act as intermediaries as well as for manufacturers directly supplying to retailers. In most emerging markets today, the wholesale distribution process is one that is based on archaic payment methods, manual discounting schemes (in many cases relationship based), and difficulties in settling of accounts. DUET for Distribution enables wholesalers/manufacturers (merchants), and retailers (clients) to replace their existing payment (and if required data collection) cycles, without drastically changing the deep-rooted operational habits.
System Description
DUET for Distribution Companies is based on the Card-to-Card Concept that securely connects two cards: the Supplier Card and the Client Card. The Supplier Card is the card that Receives Funds from Client Cards. This Supplier card cannot be used to conduct a payment transaction. It can only receive funds.
The Client Card is the card that Pays Funds. This Client card can be loaded (preauthorized) with funds from the bank smart card account (even through the internet) and transferred to any supplier card.
In the most common B2B Model the current cash (or cheque) transactions will be replaced by electronic fund transfers from a smart card to another. As an extra feature, all relevant operational categories (depending on the supplier’s requirements) such as product code, quantity and unit price can be securely transacted with the smart cards as well. The wholesaler’s sales/delivery person takes a supplier card and POS and the merchandise and goes to the designated retailers requiring the goods. The retailer/client has preauthorized the funds (through preauthorized credit - replicating/replacing the very popular post-dated check payment method - and/or preauthorized debit). Upon reaching the retailer’s site and delivering the goods, the salesman will put his supplier card in one slot of the POS and the retailer will put his client card in the other slot. The distribution salesperson will enter the product code, quantity and unit price. A screen will appear and ask if he wants to enter a further item or to end the process and pay. Upon choosing “Pay”, a PIN Request will appear with the total amount of all items and ask the client to enter his PIN to effect the funds transfer. Upon completion, both parties can of course instantaneously check, and print the transaction records. At the end of the day, the sales people will meet their finance manager to “settle” their supplier cards, still containing that day’s sales proceeds. The finance manager of the wholesale company will connect the POS to his acquiring bank through telephone line and/or internet connection in his office and will upload all the funds collected on the supplier smart cards. Since every single step of the entire transaction cycle is recorded in detail, both the supplier, as well as the retailer can receive detailed reports depicting all that has been delivered, and paid. These reports serve both as a necessary information tool, as well as a potential monitoring and controlling method.
Benefits
- Secure, remote and fast cashless payments for the wholesale distribution process
- A state-of-the-art payment solution will help reducing costs and increase both payers’, as well as payees’ satisfaction
- A more efficient inventory management will be achieved through detailed information about how much inventory there is, where it is, how it is being sold
- No cash is involved eradicating the risk of robbery and personal injury
- A substantial decrease of paper work and labor involved with trading partners
- Reduced administration and monitoring costs
- DUET's offline system conception offers lowest total cost of ownership
- Up to 8 different card products on 1 card
- Support of multiple payment schemes (pre-authorized, pre-paid, debit, credit)
- VLC micro portable terminals used in cost-effective offline mode make a mass acceptance infrastructure feasible
- System modularity and flexibility
