Searching for a new merchant services provider can be a time-intensive process. So why do so many merchants get it wrong?
Every year the dreaded season arrives. After the last vacation has been taken, as the weather starts to chill, and before you had a chance to search for a new sweater…it’s time. That time when accounting & HR departments run out of patience for your trivial requests while they venture into the never-ending search to cut costs. Yes, I’m talking about bidding season. Payroll. Health insurance. Shipping companies. And the most dreaded of them all…credit card processing.
Lost Time & The Illusion of Savings
Changing services – any service – requires time. Lots of time. Time to analyze your current needs; time to evaluate potential providers & hear their pitches; time to compare & make a decision. Finally, time to adjust to whatever service you choose. The typical business can spend nearly 80 hours searching for a potential new provider – that’s 4% of an employee’s yearly productivity.
All of this with the hope of increasing your margins by a few basis points. And if the promised savings doesn’t materialize, the process starts all over again the following year [cue collective sigh].
The Hidden (and Dark) Side of Processing
For all its faults, credit and debit card processing is a very reliable serviced, boasting a 99.99% uptime. But when a problem arises it’s not the system itself that’s the problem, rather the service structure that fails the merchant. This leads to our the primary problem with credit card processing: poor service.
When a merchant needs help, they call their whomever sold them the service through some 800# on their statement. They must make their way through deep phone trees and multiple options only to end at the processor platform, not the company who sold them (ISOs pay processors to handle service calls). If the merchant is lucky, they get their problem solved with one call. If they’re unlucky, they run into customer service hell.
This type of frustration can lead the merchant to review their costs, resulting in problem #2. Processing fees are based on interchange – a complex rate structure with hundreds of qualifications – so complex that even seasoned reps don’t understand it. Interchange may be universal, but how its presented is not. Multiple statement formats & pricing schemes, padded rates, hidden fees, and numerous line item costs; it’s no wonder there’s so much turnover.
What You Should Know Before Searching
Here at IQCS, we understand because we’ve participated in thousands of bids and felt the pain from thousands of controllers and CFOs. And we’ll like to share a few hard truths we learned over our time in sales. Truths that will help make this process just a little less dreadful.
Be prepared to be lied to. This may not be intentional. Rather, it’ll be mostly through lies of omission. Interchange is complex, which requires skill to read and predict. If anyone promises what to expect from interchange without going into the how and why, either they don’t understand it or they’re lying.
You won’t understand what’s presented. We’re trained experts who review thousands of statements and keep up to date on the most current trends. Still, we remain surprised by what we find in people’s statements. And if we’re surprised, you’ll be at a disadvantage.
No solution will be perfect. Every processor is trying to create the perfect product. But with hundreds of different industries, finding a universal solution to suit everyone’s needs is a virtual impossibility.
The Best Advice to Finding a New Processor
By this point, you may be feeling a little dejected. That understandable. Our industry is seemingly designed to confuse and frustrate accounting teams. But there is an answer. After all my years in the industry, I’d like to share my greatest advice on how to make your bidding more palatable. Are you ready? Okay, here it goes:
Tip #1 – Hire a professional to do it for you.
That’s it. I wish there was better advice to give you, but there isn’t. There are too just many variables, and too many companies lacking candor, for the average merchant to know what’s real. When I sold processing, the biggest hurdle I needed to overcome was how much the merchant understood. As hard as I tried, regardless of what information I shared, many times I lost out due to over-promising from my competitors. But that was okay, though. Whenever I lost a bid, I knew that when I called the following year, the merchant was finally ready to hear what I had to say.