Choosing the Right Solution is Easy as 1...2...3
1. BUILDING A PLAN
Choosing the right payment processing solution doesn't have to be a daunting task. Electronic Payments Lake Superior can help you find the proper solution for your business type to keep your fees low, and customer experience high. After all, most small businesses thrive off of great reviews from great customer experiences or conversely struggle from poor reviews and poor customer experiences.
Don't let a bad experience get in the way of trying to for the wrong solution into your business. We'll help you out by covering the following types of business models:
Don't let a bad experience get in the way of trying to for the wrong solution into your business. We'll help you out by covering the following types of business models:
- Payments in your store, restaurant, tavern, or service-based business
- Payments on your website whether it's an eCommerce store or booking an appointment or purchasing tickets to an event
- Payments on the go come more commonly from providing services such as landscaping, lawn care, tow truck drivers, moving companies, etc.
- Payments via email or phone still have a place in todays marketplace, so we'll cover how to best situation your business to handle these types of payment options
Payments in Your Store or EstablishmentThe most common method of payment is in-store purchases. This process is simple, a customer will select a couple of items, bring them to the checkout area, and either use a pinpad to complete the transaction, or customer-facing device included with your point of sale device.
These types of transactions will be considered CARD-PRESENT. Card-Present payments have the lowest level of risk, and therefore reflect lower fees associated with accepting card-present payments. Unlike CARD-NOT-PRESENT, the risk is much lower whereas the customer is keeping full control of their card and their card information throughout the duration of their transaction. |
Payments on Your WebsitePayments on your website are becoming increasingly more popular, specifically, after the Covid-19 period where customers could not come into the business for various reasons. Some states restricted customers inside the building, some allowed them inside but couldn't transfer the card to the employee - and so forth.
Payments are on your website have become increasingly secure, however, the exchange of information is still not as safe as a card-present transaction. Making sure your eCommerce platform has options to enter the card verification value (CVV) number, typically found on the back of card is critical. The software today will also ask for an address associated with the card to help further verify and reduce fraudulent transactions. |
Payments On-the-GoPayments on the go are a great option for service-based businesses with staff members in the field. If look at tow truck drivers, they provide a service in the field, and must take a payment while also in the field. This is much easier for folks to deploy a payments on the go, option. A mobile device with full encryption allows for card-present transactions, thus, providing you with lower fees for accepting card payments - vs - the counterpart of taking a payment over the phone before releasing the vehicle.
Landscapers, moving companies, lawn care providers, and the like can also leverage payments on the go with a secure payment device. A common practice is to send the customer an invoice and they'll pay when the invoice is due. This can lag payments and revenue, and pose an issue for some businesses with razor thin margins as they have to wait for the payments to clear. |
Payments via Email or PhoneThe digital marketing space has been using Stripe, Paypal, and Square for a very long time. They use the virtual terminal option to take card payments over the phone. This also occurs with those in the coaching space, they conduct sales calls, and collect card information over the phone. This poses an inherently risky type of transaction. In some cases, the business can see an increased number of chargebacks resulting in loss of revenue, this is called "Friendly Fraud."
It is hard to verify that the cardholder is paying for your goods or services if you don't have a physical card. Higher processing rates: MOTO payments carry a higher risk due to the chance of fraud. The riskier a payment is, the higher the fees are. |
2. CHOOSING THE RIGHT TECHNOLOGY
Payment DevicesDepending on the type of business you engage in, your payment devices will vary. Consider whether or not you will need a fully integrated POS system that sits on the counter, comes with a 15 inch screen or just a handheld device that takes payments, records sales data, and can integrate a simple loyalty and rewards program. a Smart Terminal is a hybrid between a countertop payment terminal we're all used to seeing, and a gradiose POS system. It provides the same features and functions at a fraction of the price. A mobile card reader is another option. Let's discuss your specific business needs and find the proper technology that will fit your business needs.
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POS SystemsPOS systems have come along way in their technology. Today's POS systems can be as simple as software that provides a menu, order tracking, inventory management, and sales reports like the Clover POS to fully integrated Restaurant Management Systems. A multi-channel POS system can operate anywhere in your building, you can start an order at the server station, walk across the dining floor, and finish the order near the kitchen, and update the order near the bar. Restaurant Management Systems can handle order tracking, menu costing, employee timekeeping, tip management, and table mapping functions, to name a few.
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eCommerce and Virtual PaymentsAnother option that's becoming increasingly popular is virtual payments and/or eCommerce payments that take place on a website, in an eCommerce platform or in a shopping cart. This can be for your hotel, motel, resort, vacation rental, campground or other similar platform whereas customers can make reservations through a website. This can also take place where patrons are buying tickets to a show, reserving gym space, or booking an appointment with a hair salon, nail salon, or other related service. These solutions are great for those that want to focus on running the business, versus, taking card payments in-person.
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3. Choosing the Right Pricing Strategy
Interchange-Plus Pricing StrategyInterchange-Plus is the most transparent pricing strategy on the market. This is a very simple tried-and-true pricing program whereas the business pays two different types of card fees.
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SurchargingSurcharging is the most abused program in the market. The card brands created a surcharge program for business owners to follow. It requires registration with the card brands, and a 30 day wait period. Once approved, you can ONLY surcharge credit cards. It is illegal to surchage a debit card or prepaid debit card, and if a complaint is filed the fines range from $1000 to $5000 for first time offenses.
Surcharging is only allowable on credit cards for cost of acceptance. In short, if you are set up to run a 3% surcharge - you may only charge 3% on CREDIT CARDS. You may not surchage debit cards or prepaid cards. By doing so may result in a $1,000 fine for first time offenders. Let us help you navigate these landmines to help you better understand pricing strategies. |
Cash DiscountingCash Discounting became legal, and came into prominence in October of 2011. However, again, there are some very strict guidelines as to how the program is to be implemented.
Your list prices are those of your credit/debit card prices. If you are showing $10 for an item, that includes the cost of the item and cost of accepting cards. If you wish to implement the cash discount program, you could offer a discount for usage of cash or check in the amount of 4%. Most payment devices and POS systems today will calculate this for you without any issues. In this example: Card Price: $10.00 Cash Price: $9.60 (with 4% discount) What is most common is that businesses will show a list price, and if a card is used will assess a 4% fee for using a card to complete the transaction. This is non-compliant and at risk of penalty from the card brands. |
Dual Pricing StrategyDual Pricing is definitely not a new strategy. Fuel stations have been doing this for nearly a decade. However, until recently, POS and payment device technology was not able to handle the dual pricing option. Now, at the point of checkout - POS technology allows customers to see a cash price, and a card price. This pricing strategy allows business owners to keep 100% of their transaction while also maintaining full compliance with any and all card brands. This pricing strategy does require some heavy lifting with a payment professional to help you set up pricing and percentages to ensure the business owner isn't charging more than the cost of acceptance, and is charging enough to cover the costs of the card fees. In the example of a $20 T-Shirt. You need to earn $20 to meet your margins to keep your store open.
You'll want to display the following: Card Price: $20.83 Cash Price: $20.00 The biggest challenge if implementing the dual pricing strategy is ensuring that you have proper signage and/or list prices on all of your in-store items, or menu pricing. In some instances, it can be incurred costs for printing of new menus, or print and replacing all skus in your store. Consult with Electronic Payments Lake Superior to learn more about Dual Pricing. |
Reverse Cash DiscountFor a short period of time, Reverse Cash Discount (RCD) was a very popular program because it allowed any business to add a maximum of a 4% fee to any transaction that was completed using a credit, debit, gift or prepaid card. As of April 2023, this program is now considered non-compliant with the card brands.
In order to be in compliance with the card brands, a business owner must add the 4% fee to all forms of tender, including but not limited to; Credit Card, Debit Card, Prepaid Card, Gift Card, Cash, Check, Money Order, or Cashiers Check. The program is now considered the "Admin Fee Program" and a play on the surcharge program. Surcharging is only allowed on credit cards - whereas the Admin Fee MUST BE added to all forms of legal tender to remain in compliance - yes, even cash and check. It is highly recommended to look at a True Cash Discount Program, or move into the realm of Dual Pricing to ensure compliance is met, and no penalties are assessed for simply accepting cards as a form of payment. |
Why Do You Call It Pricing Strategy?The name of the game at the end of the day is Customer Experience. The experience the customer has does involve what happens at the checkout counter. If they're going to be charged a fee for using a card, how do they perceive that practice? Conversely, what if they were provided a discount on the listed price for using cash? Now, they were granted a discount they were not expecting. Additionally, what if they saw an item on the shelf that has two prices? One for card, and one for cash - this may remove the friction as it is an honest, transparent, and truthful promotion of pricing. What is they were assessed a 4% fee for using cash? How would the customer react to this practice?
This is why I call it a pricing strategy. It is a strategy that is based on a couple of factors:
How Do I Make Sense of All the Fees?Let's get down to the meat and potatoes of this whole fee fiasco... or shall I call it Fee-asco?
Do you think it is fair that you are paying credit card fees so the customer can collect points, rewards, miles, and cash back incentives for swiping their fully loaded Visa Credit Card. It seems reasonable that if the customer is making a purchase, they can pay for thier own points, rewards, miles, and cash back incentives while the business owner keeps 100% of their price for that transaction. This is also why it is recommended to speak with a payments expert to help you understand how to read your merchant statements, break down the fees, identify which fees are card brand fees, identify which fees are able to be reduced or eliminated, and how you can utilize a pricing strategy to offset all of your fees and keep 100% of your profit margins. |