Consumers like the convenience of buying online, buying over the phone or
purchasing gift cards, so offering these options exposes your company’s products
and services to new customer segments and
often expands your selling hours without
adding brick and mortar or additional staff.
Expanding your business through the use
of merchant services can increase revenue
without increasing fixed costs.
“Some customers prefer the convenience
of consolidated credit card statements or
receiving frequent flier miles or cash
rebates for their purchases; still others
can’t qualify for credit cards, so they use
debit cards to complete their transactions,”
says Mark Hayes, vice president and commercial merchant sales manager for Fifth
Third Bank. “Strategic use of merchant
services can expand your markets and customer base and, perhaps best of all, they
level the playing field between small and
midsize businesses and the big guys.”
Smart Business spoke with Hayes about
how CEOs can win new customers by
expanding their use of merchant services.
What are some merchant services available
to businesses?
Merchant services provide businesses
with a set of comprehensive solutions for
accepting credit cards, debit cards and
online payments from customers. The
solutions are often provided on a turnkey
basis, including point-of-sale (POS) equipment, shopping carts and merchant
accounts or through referrals to qualified
vendors, making it convenient for small
business owners. Merchants can track
their transactions online in real time and
download sales data into software programs like Quicken. Greater data capabilities allow owners to view their average
sale transaction amount, and then experiment with ways to increase it and discover
growth opportunities by analyzing customer buying trends and habits, and then
add new customer segments.
Also, POS equipment is now available
that uses wireless technology to transmit
transactions, so merchants can accept
credit cards from customers at flea markets, trade shows or in their homes.
How can merchant services improve the customer experience?
Giving customers every possible way to
do business with your company improves
their experience and makes it more likely
they’ll buy from you again. Statistics indicate that it costs more to get new customers than to retain old ones and that customers will spend more when they use a
credit card to pay for transactions. Gift
cards are becoming increasingly popular
with consumers. Buyers don’t have to
worry about selecting the right size or
color, and the recipient gets exactly what
they want, so offering gift cards provides
customers with a fast and less-stressful
shopping experience. Also, it’s unlikely a
consumer would pay for high-ticket items
with anything but a credit card, and busy
people and younger consumers want to
purchase online, so unless you give them
what they want, they’ll go somewhere else.
What are the cost implications?
The fees for credit card processing average 2 to 3 percent of the total transaction
amount and a POS terminal and software
can average $300 to $500, while wireless
terminals average $800 to $1,000; set-up
fees are fairly nominal. The cost of taking
payments over the Internet is sometimes
less expensive for the upfront costs but
can be more expensive for each transaction because of the higher V/MC interchange fees. Also, while some consumers
still pay with checks, it can take a few days
to receive notice of returned items, while
credit card and debit transactions are verified on the spot.
What security is best for these types of transactions?
Make sure your equipment and third-party processor is PCI compliant, which
stands for Payment Card Industry Data
Security Standard. Any organization that
accepts payment card transactions must
be in compliance with the standards. Your
merchant banker can refer you to vendors
that meet the security standards.
How can a merchant banker help?
Merchant services bankers can provide
you with turnkey solutions and equipment
financing to help you expand your business through enhanced payment options.
They should be able to either lease or sell
you a POS terminal. Some business owners
opt to lease first, then purchase later, so
they can try the equipment before committing. A merchant services banker can also
help your company expand into e-commerce by recommending a shopping cart
vendor for Internet purchases. If you select
the same bank for your merchant account
and merchant services, the money from
transactions normally transfers into your
account in 24 hours instead of 48, which
improves cash flow. Your banker should
also be able to give you advice and ideas
about the best ways to expand your business through the strategic use of merchant
services, so owners should see them as a
complete resource to build revenue.
MARK HAYES is vice president and commercial merchant sales manager for Fifth Third Bank. Reach him at (813) 306-2407 or
[email protected].
