The fault in "everything is free" payment processing offers.

Written by Jereme on

Tips for selling value instead of price. 

When it comes to business operations, one of the most complex topics for business owners to get a solid grip on is payment processing. Various structures surrounding acquiring merchant accounts or sifting through offers with different terms. have created so much noise in the marketplace that it can be difficult for owners and managers to identify the right services for their businesses. 

One model that's grown in popularity is so-called "everything is free" payment processing, where merchant services providers offer free hardware or other perks to entice merchants to sign up. However, these deals often come with a hidden downside for their customers.  

Educate merchants on pros and cons.  

Some payment service providers offer quick approvals because they bypass the process of setting up individual merchant accounts. The provider may serve as a merchant account for all of their customers, making it easy to get approval. However, before long factors such as transaction volume, business type, or a merchants’ products and services being categorized as “high-risk” can lead to service termination. 

Explain that working with you will ensure your merchant will have their own personal merchant account properly set up for the type of business they operate – and won't come with any future surprises. 

The fee shell game.

The idea of receiving free payment processing hardware and services, such as mobile apps, virtual terminals, invoicing software, and more, is very attractive to business owners. The problem is that such an arrangement isn’t right for all business owners. 

Take time to run the numbers with your potential customer. For example, a business that typically has high-volume transactions greater than $67 with total monthly transactions of less than $10K per month can be an ideal candidate for the flat rate pricing that some payment service providers offer. However, businesses outside of that window will end up paying higher costs in processing fees and might be better off with a different pricing model. 

What's the providers' approval rate?

It's critical for a business owner to understand a payment processor's keyed-in success percentage rate. Businesses lose revenue when transactions are incomplete or rejected, and "free" isn't worth that cost. 

Get the lowdown on Level 3 data processing

Business owners should be wary of the promise of low-cost fees for Level 3 data processing. Few transactions can live up to that standard – especially for small and medium-sized businesses (SMBs). Additionally, standard credit card terminals typically don't support Level 3. Take the time to educate business owners on exactly what fields are required for Level 3 processing (like invoice numbers, units of measure, commodity, and product codes) and suggest alternatives that help them get the fee structure that best fits their specific business. 

Stress the support you can provide. 

Receiving free payment processing equipment sounds like a great idea until something malfunctions. When problems occur, what kind of support will the provider offer? A large payment service provider will not likely offer the personalized service – even onsite when necessary – that you can deliver. 

Stop competing on price

Payments models that include "free" payment processing equipment certainly get your merchants' attention. However, merchants need to know all the offer's details so they can make smart, informed decisions. 

The best decision is likely to partner with you and gain the advantage of your expertise and the services you offer – not to mention lower total cost of ownership when compared to the "free" offer. 

For more help on competing with "everything for free" payment processing offers, contact NAB today.