Managing the Costs of Payment Acceptance: A Guide for Retailers (Part 2)
From Scott Cruickshank, Chief Marketing Officer Paymentech Do faster transactions translate to higher sales volume?
To dial, or not to dial? Take an assessment of your business – five years ago, you may have operated one or two locations. Today, perhaps, you’re a multi-location organization spread across a large geographic area. In the next two years, you may add an e-commerce site, or begin franchising. If your business future holds tremendous growth plans, you will need the technology to support that. In today’s world of advanced communications, the good news is, you have lots of connectivity options, and many of them are more affordable today than ever before – even Internet connectivity. New products now make it possible even for merchants with relatively low sales volumes to have the kind of connectivity that is fast making dial-up a less attractive choice. Even for a relatively small merchant, Internet connectivity via a digital subscriber line (DSL) is quite practical, and can actually save money by eliminating phone lines. Do faster transactions translate to higher sales volume? If you are able to service more customers, yes. And if those customers tend to return to your business because of the convenience of shopping there, yes again. Choose the right connectivity That’s why it’s important to work with your processor to determine the most cost-effective communication method for your business type and size. For example, Paymentech offers merchants everything from dial-up and DSL to frame relay and satellite communications (VSAT). Each is right for particular kinds of merchants. None are right for all merchants. How old is your terminal? While there are costs involved in acquiring new equipment, if you haven’t upgraded your terminal and/or software in the last three years, it may be time to consider doing so. Today’s newer terminals, such as VeriFone’s Omni 3750, can support multiple payment types and reporting features and offer faster connectivity. Is it worth it to you to offer your customers faster transactions, to acquire dynamic reporting tools and to get rid of unnecessary hardware? When you do acquire a new POS system, take a close look at what it can do today, and what its capabilities are tomorrow. Can it grow with your business? Can you add gift card processing? If the POS system can’t grow with your business, find one that will. Look closely at your statements You get a statement every month detailing the types of payments processed, as well as the associated fees. Do you understand your statement? Do you understand the different fee structures and the reasoning for each? This can be a very complicated undertaking – even intimidating – and yet it is one of the most crucial. Knowing what is on your statement can make you aware of problems, inconsistencies, etc. If something does not make sense, call your processor and have them explain it to you. That’s your right as a customer, and it’s their job as your processor. Examine your payments options Processing fees vary according to the type of payment you are accepting. Are you accepting the types of payment that will afford you the lowest rate? For example, PIN-based debit is a more secure transaction that is less costly than signature debit or credit transactions. Gift cards, likewise, do not carry the interchange costs of credit cards and can be a tremendous revenue enhancer. Finally, your processor has a responsibility to you to assist, both through technology and consultation, in managing those fees. When choosing a processor, pay close attention to value-adds that can help you in the long run. The secret is in finding a processor that understands your business, and that will gladly partner with you to help manage the costs of payment acceptance. About the Author Scott Cruickshank is based in the Dallas, Texas headquarters of Paymentech, the nation’s largest processor by transaction volume. Scott oversees the direct sales force, customer care and account management departments as well as the training, service quality, marketing and public relations functions. Copyright 2004 Scott Cruickshank. All rights reserved. Used with permission.