Four Problems Even the Best Merchant Service Providers Face

As a merchant services provider, do you offer merchant tools to help you cater to the many different types of businesses in your market? Upon talking to many bankers about referral programs, there seemed to be an overwhelming number of people with frustration over the lack of flexibility when pricing new accounts. 

When trying to succeed in a fairly competitive market, it’s necessary to be flexible when it comes to pricing and offer many different options. The best merchant service providers will work hard to offer pricing based on each merchant individually and take into consideration size of the merchant, average ticket size and the amount and mix of different reward cards, debit cards, credit cards, etc. 

Here are four problems to avoid if you want to offer the best merchant service possible. 

Flexibility 

Small business owners are looking for merchant service providers that will work with them to help find or create the best option for their success. However, some financial institutions’ merchant services programs still only offer one pricing option. The problem can be due to system limitations or the bank’s fee structure.

As a service provider, it’s your job to try to offer your merchants what they need – that could be either a discount (tiered) or interchange plus (pass through) pricing method. Unfortunately, when banks are only offered one option that doesn’t meet all of their needs, they are forced to turn business away. Providers should be able to offer more than one method, and as we move into the future we’ll probably see more hybrids of the two – discount pricing with pass through fees. 

Small Ticket Merchants 

It can be difficult to use discount pricing for merchants with small ticket sizes. For one, the discount rate for merchants with a ticket size less than $15 has minimal impact and the transaction fee has a significant impact. Normal ticket sizes have the opposite effect.

The smaller the ticket, the harder it is to use discount pricing – but some banks still are unable to use pass through pricing because it is not available from their provider.

Limited Rates

The discount rates offered by many financial institutions’ merchant service programs tend to be rounded to a specified amount, rather than delivered in smaller increments. However, real world situations often call for precise rates, otherwise banks will likely frustrate their customers or offer lower-than-necessary rates, thus lowering profitability. 

Nonexistant Support 

Both industry veterans and “newbies” occasionally come across merchant statements that are difficult to understand. Because of this, it makes it harder to price the merchant correctly. Some banks have the luxury of calling their credit card processing company for guidance; others do not and are left to fend for themselves. With more support, banks will be able to better evaluate sales opportunities. 

 

About The Author

As a Relationship Manager, Nick Karcher supports both current bank partners as well as those institutions that want to know what makes Clearent a different kind of payment processor. Nick began his career in debit and credit card processing with Electronic Merchant Systems (EMS) as an Account Executive and later started his own Independent Sales Office. Clearent is always working toward being the best merchant service provider possible through dedicated staff and many services. Learn more about Clearent’s financial institutions merchant services programs that include next day funding merchant accounts can help you improve your sales.