The FBS college football season just got cancelled up north in the Big Ten conference and while that has not yet hit Texas, it presents a view into the future of our economic culture for consumer purchase habits. We must not underestimate the significance of cancelling an entire football season as that means universities are forgoing massive revenue from tickets, concessions, and especially TV time. With that being said, one thing remains clear: consumer purchase habits have changed dramatically and will remain in this dynamic state for some time.
One of the most important things a business can do during this time is ensure it can collect payment for the products and services it renders. As many businesses know and understand, restaurants must now have the ability to take orders online while still connecting to its POS system, retail stores must do the same, and mobile businesses must ensure they can successfully use the social distancing guidelines while collecting payment. With the flu season coming up, with the news of cancelled football seasons, and various other changes, it is very logical to predict that consumer behavior will not “go back to normal” in the coming weeks or months – it is going to take time. With this acceptance, however, businesses can take control of the situation and of their future to position themselves to succeed in such an environment.
With that in mind, what can you do as a business to ensure you succeed in this prolonged COVID economy? Are your payment systems where they need to be? Have you embraced virtual technology? Is your business financial planning on point? These are only a few of the many questions businesses need to be asking so that they can position themselves to succeed. What questions are you asking yourself and what components are you still working on to succeed? As we all go through these changes internally, know that we are here to help in any way possible and that we are here to help you succeed!
I recently had the pleasure of discussing digitalization with our friends at Primaris Market Development and I wanted to share the discussion with you. In a nutshell, COVID-19 forced the economy to an almost 100% digital economy and the vast majority of businesses were not ready for such a fast transition. Interestingly, however, the economy was already heading in that direction – COVID just showed us a glimpse of what that futuristic economy looks like. As businesses, we must adapt to this digital economy if we are to not only survive but thrive; it is where our economy is going and we cannot afford to get left behind.
In this discussion, Chad Tongco of Primaris and I discuss digitalization, the importance of it, and some of the experiences we have had as we continue to digitalize our respective businesses. Although digitalization should be an organization-wide endeavor, Chad and I discuss the PARC framework specifically to help focus the discussion on the relevance to small businesses. Each business will have a slightly different path to digitalization but the PARC framework will help small businesses focus their digitalization efforts. I hope you find the discussion interesting and helpful as we all continue to adapt and thrive!
Click the image below to watch our full discussion.
Stay safe and stay blessed!
It’s a nightmare that many businesses have faced: they perform a large job, collect payment on a card, but the money does not hit the account. Being patient, these business owners wait another day but still nothing, so they call in and after waiting on hold, they learn the funds are being held for one of many potential reasons. After spending even more time on the phone and more days of headache and stress, the business finally gets the revenue it earned and needs to continue operating smoothly, albeit rather late. The question every business owner asks is, how can this be prevented and what needs to be done to achieve that goal?
The first thing every business should do is ensure it has a good relationship with its processor and although there are many reasons why this is important, one particular reason is due to the fact that a good relationship with your process will ensure they understand your business. For example, let’s assume an HVAC business normally processes $50k per month with an average ticket of $750 and a ceiling per ticket of $5k. If this business at random tries to process a credit card payment of $12k, funds are likely to be held until the transaction is verified. If this HVAC company has a good relationship with their processor, they would be able to call this person right away and have them help resolve the issue which saves significant time and headache. Although it can vary significantly, it is common for this strategy to reduce the wait time to only two extra days compared to an entire week. If there is no true relationship with the processor, you will be sent directly to phone support alone which can be extremely frustrating when your money is being held.
There is another important way to prevent funding delays, however, yet very few business practice it. In the above example, one of the best things the HVAC company can do is contact their processor and let them know in advance they have an unusually large transaction coming up. If this HVAC company has a good processor, the business can reach out to the processor and the processor will request some information, such as an approved estimate/invoice, the customer information, and payment terms, and the processor can then have everything ready to confirm and validate the transaction. In this situation, the processor is able to have everything lined up so the moment when the funding delay is triggered and the transaction review begins, all of the information is already available. When this happens, the funds transfer on schedule and the business owner is saved much time and headache.
In summary, if you want to prevent and greatly reduce the risk of funding delays to your business, you need to do two things:
By doing these two simple things, you can prevent many issues and maximize the value of the processor that you use. As always, if you ever have any questions related to funding delays or other parts of payment processing, please do let me know and I would be more than happy to help!
One of the concerns that business owners have regarding the payment process is how much will it cost them to merely collect payment for goods and services rendered. While there is some variability based upon factors like processing volumes, the number of transactions, the type of card used, and so forth, one program that has some interesting merit to it is called 0% processing. Under this system, the business pays only the monthly cost – they do not have to pay any rates.
In the 0% processing system, there is a cost to process the payment but this cost is passed on to the business’s customer. For example, let’s take a small coffee shop that is getting ready to sell a large mocha latte for $4.95. Under the 0% processing structure, when the business rings up the latte, it will charge the customer roughly $5.40 (3% + $0.30) but the business gets the full $4.95; the remaining $0.45 goes to the merchant services company to cover the processing costs. Conversely, under a regular pricing structure, the merchant would collect $4.95 for the latte but then pay the processing costs out of that so its profit would be less. Restated, in a 0% processing system, the processing costs gets passed on to the customer. The only cost the business pays is a small monthly cost that varies based on the system used – a very simple system costs cost very little per month while an elaborate software would cost more.
With that basic understanding of the system, the next question is does it make sense for your business? It largely depends on the price sensitivity of your customers (also known as elasticity) – for businesses like coffee shops, retailers, and restaurants where the elasticity tends to be lower and where businesses have many low-ticket transactions, yes, 0% processing makes a lot of sense. Conversely, where price sensitivity tends to be great and where businesses have few but large-ticket transactions, 0% processing may not work as well for them. 0% processing also depends on the business’s brand and business model, so there will inevitably be uniqueness to each situation.
If price sensitivity is not a major issue in your industry, 0% processing makes quite a bit of sense. Additionally, for small ticket industries where the average ticket is less than $150.00, 0% processing also makes sense. When pricing is an important part of the sales process or if the tickets are large, businesses will be better off building 2-3% into their pricing before the sale or simply adding a convenience fee at the time of sale.
If you have any questions about 0% processing or adding convenience fees, please let me know and I will be more than happy to help in any way possible! Have a wonderful week and a blessed day!
Business Insider just released an article this week about Square holding funds in reserves but this is no small number – it is an astonishing 20-30% of processing revenues (read more here). While COVID-19 has hit almost all businesses very hard, including Square, it is not reasonable to hold 20-30% of a business’s processing revenues without warning at a time such as this. This is the type of practice that forces businesses to pursue desperate financing options just to stay afloat or, even worse, close doors. Sadly, this is not uncommon for Square – as the article notes, it is a common practice.
If you know someone who uses Square, now is the time to change processing systems; very few, if any, businesses can survive revenues decreasing unexpectedly by 20-30%. There are many businesses that use Square and, sadly, they will be very strongly and very negatively impacted by this withholding policy but that does not mean that the business has to simply accept this… there are alternatives. If you know a business that uses Square, please help us connect with them so they can actually keep the money they have worked so hard to earn. Very few, if any, businesses can survive a policy like this, and time is of the essence if businesses are to survive COVID-19 restrictions and now this. Please forward this message to a business you know that uses Square so they can find an alternative to this terrible policy by following the link HERE.
Stay safe and stay blessed!
One of the most common questions we hear, especially for businesses that use the Converge or Authorize.net gateway, is do we integrate with QuickBooks? We are very excited to announce that our Converge and Authorize.net gateways now integrate with QuickBooks through a third-party app! This app synchronizes the data so that you can take payment through our gateways over the phone, via an email invoice, on a mobile app, or through an EMV chip reader and have it synchronize with your QuickBooks program! We always strive to make your life easier, safer, and more profitable and we are very excited that we can now offer this service to you! For less than $30.00 per month, you can integrate either one of these gateways with your QuickBooks account!
If you or someone you know would like to work with a processor they trust and integrate it with their QuickBooks, now is the time to achieve the best of both worlds! All we need is a simple conversation to know what a business needs for their system and we can help them get a program that is easier, safer, and more profitable! Please help us spread this great news by forwarding this email to a small business that might need this capability! Stay safe and have a blessed day!
Want better, safer, and more profitable processing that integrates with QuickBooks? Now you can! Apply now and integrate our processing with your QuickBooks!
Coronavirus has changed and altered many components in our economy, from consumer behavior and consumer spending habits to supply chains and financing. In this video, we conducted a live presentation with Chad Tongco of Primaris Market Development, a small business consulting firm in California, to discuss how business can adapt in order to succeed in the radically different business economy in the post-COVID world. This is a video series and in this first video, one of the topics includes alternative financing and some preliminary information for that realm, such as when it makes sense, what it looks like, and how it can work. Click the image below to watch the presentation - it is a great watch during lunch!
As always, if there is anything we can to help you and your business, please let us know!
I just wanted to send you a quick PCI Compliance update as this is something that can dramatically impact your business. Even though the number of phone orders have increased due to COVID-19 and the various shutdowns, these transactions have not been deemed any less dangerous to chargebacks. If there is not sufficient proof of purchase collected and if the card data is stored improperly/insecurely, this can still be a perilous situation for businesses and your customers. There are, however, steps to take to ensure you protect your business while also protecting your customers. There are many details associated with each item but I wanted to simplify it as much as possible for you:
Especially during times like these, it is wise to have proper protocols in place for changing the way in you receive payment as well as security standards and knowing who can access your payment processes within your organization. These are some of the important reasons why selecting your processor is so important – there is more to moving money than just a few button clicks; even though it may look that simple in the moment, there is much more at stake if these details are left unattended. If you or someone you know needs assistance with any of the above items or if you are unsure if you have adequate protections in place, please do let me know and I will be more than happy to help in any way possible. At Merchant Masters, these are all problems we solve through our consultative approach to help you succeed.
Stay safe and be blessed!
The ins and outs of PCI Compliance can sound complex and confusing, especially if you are just opening a business or are in the midst of transitioning your business to accepting credit cards. Regardless, if you are reading this blog, the most important takeaway is that PCI Compliances is NOT optional, PCI Compliance is mandatory. In fact, any business (large, small, and everywhere in between) that takes credit and/or debit cards, is required to abide by the PCI DSS (an abbreviation for Payment Card Industry’s Data Security Standard). While it may appear confusing at first, it essentially covers the “collection, storage, transmission, and use of customer and account information embedded in these cards” (Connolly & Haley, 2008).
When a business accepts credit/debit cards, the business has a responsibility to ensure PCI Compliance throughout its operations, from the highest levels of the organization to the lowest. The penalties that a company can face for failing to be PCI compliant can carry a heavy to toll – both legally and in regards to the publics’ perception and trust (but we’ll address these consequences another time). For the moment however, it is enough to recognize that PCI compliances is necessary and compulsory.
Being compliant requires certain security measures electronically, such as having data encryption, but there are others. Apart from these precautions, PCI Compliance additionally extends to any data that exists in paper form, which means that “all data, regardless of format, used throughout the organization must be safeguarded” (Connolly & Haley, 2008). It may come as a surprise that even in the technologically driven age we are in, there are still many PCI Compliance failures resulting from “manual processes, poor business practices, insufficient training, lack of policies, human misconduct, and sometimes just plain staff carelessness” (Connolly & Haley, 2008).
This is why it is important to enforce an environment and build a culture that is educated about and involved in upholding PCI Compliance within your business. Sometimes the third-party that you select to handle your merchant services/credit card processing will be able to assist you – not only in explaining PCI Compliance but also in giving you tips on how to go about auditing your compliance. Whether you personally setup your own credit card processing or rely upon a third-party, the liability remains. This is why experts stress that PCI Compliance is an “important business function” (Connolly & Haley, 2008), because in the end, PCI Compliance is anything but optional.
Connolly, D. & Haley, M. (2008). PCI DSS Compliance: Just Whose Responsibility is it?. Hospitality Technology. Retrieved from https://hospitalitytech.com/pci-dss-compliance-just-whose-responsibility-it
Can a POS system really save money? Yes, and in fact, experts say that the right POS system has the potential to save “much more then you can imagine” (Ravindra, 2018). This is particularly true when dealing with an integrated POS system.
Why is that? The right integrated POS systems comes with a few noteworthy perks for saving both money and time. While there are multiple ways it accomplishes this, we’re going to focus on two specific areas – namely, accuracy and maintenance.
By improving ordering accuracy, it is possible to further reduce certain costs – such as ones related with supply surpluses. With an integrated POS system, through its inventory tracking (including automating its inventory tracking process) can allow you to “track busy and slow times of the year” while also saving on “labor costs” (Siebert, 2017). The nature of such a system also can reduce human error, because when employees are logged into a centralized, integrated system there is greater transparency and “business owners can easily track any miscalculations” (Siebert, 2017).
So how does it affect maintenance? If you opt to go with a POS system that is integrated, this simple step can help you opt out of some tedious maintenance costs and lost time. Having an integrated POS system can allow you to sidestep the frustrating issue of having a vendor shift the responsibility on a different element of the POS system – which forces you to devote valuable time and finances to resolving the technical problem. With an integrated POS system, such technical mishaps are much simpler to solve because “one company is typically responsible for maintaining your technology” (Ravindra, 2018). So, in terms of saving your own valuable time, sales, and customers – choosing an integrated, one-stop shop POS system can definitely put you ahead of the game.
Despite the fact that acquiring a POS system does incur an upfront cost, experts stress that the right one “can save a lot of money for you,” and that it is “highly economical in the long run” (Ravindra, 2018). In the end, the right integrated POS system that fits your needs can ultimately save you from having to foot the repair bill, protect your time (so that you’re not the one wrestling with any technical problems), and streamline your inventory process so that you can actually reduce costs.
Ravindra, S. (2018). The Significance of POS System to Automate Sales and Increase Productivity. Global Digital Marketing Summit. Retrieved from https://gdms.texilaconference.org/blog/
Siebert, W. (2017). How a POS Can Help Streamline the Restaurant Inventory Process. Modern Restaurant Management. Retrieved from https://www.modernrestaurantmanagement.com/how-a-pos-can-help-streamline-the-restaurant-inventory-process/
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