Posted by: midpen | February 10, 2011

Sure-Fire Way to Boost Your Profitability

(Contributed by Luis Santiago, Heartland Payment Systems)

I can’t tell you what’s going to sell or how you should market it.  But if you accept credit card payments, I can show you how to retain a higher percentage of those payments.

And if you aren’t taking credit card payments, I’m going to explain why you should be.

But first, a crash course in Credit Card Payment 101. When you open your monthly credit card statement, there’s a good chance you don’t even try to decipher it. There’s an excellent reason: the statements have been designed to be confusing! One thing that will not be crystal clear is exactly what percentage of the purchase price on every transaction the credit card company is going be keeping for itself—and keeping from you.  If you’re like most merchants, you wish that percentage were a lot smaller.

It can be!  The major card companies don’t keep everything for themselves but divvy up the fee to as many as three or four other entities, “middlemen” that include banks and their card processors.  Why is this?  Well, U.S. laws forbid banks to be processors and processors to be banks, and every entity gets a piece of your credit card payment pie.

Fortunately, you can keep more pie for yourself by using what is called a “direct processor,” which moves funds in and out of the Federal Reserve on behalf of merchants. The percentage you pay is smaller when you use a direct processor like Heartland, which I represent, because you’re cutting out the processing middlemen. Switching over is a snap: all that’s required are 6 signatures on a application, which takes about 20 minutes to complete, and in 24 to 72 hrs., every transaction becomes more profitable for you. Your monthly statements will also be easy to understand, and 24/7 customer service will be excellent—which you may have reason to know is not always the case if you’ve needed to resolve problems with major card companies.

Don’t take credit cards?  Another sure-fire way to boost your bottom line this holiday season is to offer credit card payment. Since you probably use a card, or cards, yourself, you know it’s easier to swipe plastic than pull bills from your wallet or write checks, especially for big purchases.  Plenty of studies show that purchasing now, paying later leads to increased purchases (both an increase in number of sales, and the size of the average sale increase when a merchant accepts credit cards). Enabling you to process credit card payment is as quick as switching you to direct processing.

As my gift to you: for next 10 days, I’ll come to your office or shop, give you a free rate review, and waive application and conversion costs (a $35 to $100 value). To learn more over coffee, attend the MPPA breakfast at Scott’s Restaurant in March of 2011, when I’ll be the featured speaker.

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