Not Sure You’re Getting the Best Payment-Processing Value for Your Business? Here’s How a Co-Op Can Help
March 29th, 2021
By Stacey Wiles, Director of Operations
Every business needs a reliable payment processor that fits their budget. But finding one can be like trekking through the wilderness by yourself—trying to compare rates, understand agreements, and avoid unforeseen service gap pitfalls —while also running your business.
When you shop around and try to compare your options, the processor you choose may not deliver the value you need, simply because the choices are so complicated. What’s needed is a guide to cut through the complexity, so you can get the most value from your relationship with the right processor.
Here are three common ways that businesses unintentionally leave payment processing value on the table.
1. Losing revenue to controllable payment processing costs
Processing costs and rate structures are complex, and they vary by processor and payment platform. Interchange fees, assessment fees and processor fees are the three main fee categories merchants pay for processing.
Processor fees can take several forms (per-transaction, additional basis points and monthly fees, for examples), and the exact amount of each fee can vary by card, network, merchant category, how the card data is entered (swipe or keyed in), and the transaction amount.
In addition, large merchants can negotiate competitive credit card processing rates due to the volume of card transactions they process. Small businesses, on the other hand, do not have the leverage on their own to negotiate for those competitive rates because their volume and number of transactions is too low.
For example, many SMBs spend between 20% to 70% more on their controllable payment costs—everything but the interchange fees—because they lack the bargaining leverage that bigger merchants have. Paying higher rates eats into your revenue and it can put you at a disadvantage in spaces like e-commerce, where competition is stiff, and margins are thin.
2. Losing time to inadequate customer support
Just like the biggest merchants get the best processing rates, they also get the best service and support from their processors. Small and midsize clients are often routed to chatbot and email service channels instead of being able to get someone on the phone.
This makes sense for the processor—they’re going to invest the most in keeping their most profitable clients happy. Meanwhile, though, the small-business owner who has to wait hours or days to hear back from customer service when they have a processing question or problem can be losing sleep, and customers, over an issue they can’t resolve fast.
3. Losing cash flow and revenue due to unexpected contract issues
Only 10% of small-business owners who attended a December 2020 SCORE webinar by Delta Payment Solutions CEO Irwin Grossman said they fully understood their payment processing agreement before they signed it. Half said they didn’t understand. The other 40% said they “sort of” understood their contract.
Those numbers are understandable, because processing contracts are long, complicated, not amenable and full of legalese that the small-business owner may not be able to decipher. Businesses usually need to start taking payments quickly and those without a legal department often sign on without fully understanding what they’re agreeing to.
All of this can leave businesses unprepared for several reasons, up to and including if their processor decides to withhold a reserve from their revenue. Reserves can range anywhere from a few thousand dollars to tens of thousands that the processor will hold onto as protection against risk.
For some businesses, reserves are required for initial contract approval. For those that do not require an initial reserve, agreements are written into processing contracts and can be triggered by a sudden spike in transaction volume, increased chargebacks and other circumstances that raise flags for the processor. Without understanding that this kind of cash flow issue can arise and plan for it, some businesses find that they can’t make payroll, pay vendors or keep the lights on because the processor has their funds in reserve.
A payment cooperative, or co-op, can help you with all three of these challenges and even deliver a bonus that your business can’t get with a traditional processing agreement. Here’s how Delta, the only true cooperative in the merchant processing space, works to deliver more value for our members.
1. Lower processing rates through group buying power
Our co-op leverages group buying power to get better processing rates for our members than they could get on its own. That allows you to keep more revenue from each transaction so you can grow and scale your business.
2. Time savings with high-quality customer support
Because the co-op is owned by its members, it’s set up for their benefit. That means no skimping on service. Make a quick call or send an email, and the Co-op Member Support can answer your questions and help you deal with payment issues quickly, so you can get back to running your business.
3. Experienced processing guidance as you grow
The co-op’s leadership team has more than 100 combined years of experience in payments, as merchants and as providers. That means the co-op can help you understand your agreement and avoid surprises like reserves by planning ahead and guiding you on how to proactively communicate with your processor as you grow.
Bonus: Co-op members get money back every year
As a nonprofit, Delta returns 50% of its co-op revenue to members each year as a bonus, with average payouts to our current customers ranging from 1% to 2.5% of total annual card sales volume.
For example, a member with $3 million in annual card sales could see an annual co-op bonus payout of 1.8%, or $54,000. That’s revenue they can use to hire a new employee, develop a new product or expand their market reach.
The takeaway: Co-op power adds payment-processing value for SMBs
On their own, small and midsized businesses often struggle to find a payment processor who’ll deliver competitive rates as well as excellent service and proactive support for growth. A co-op membership delivers all these benefits plus annual bonus payouts, thanks to the power of group leverage and experienced guidance.
Want to learn more about how Delta can help you get the most value from your payment processing? Give us a call at 1 (844) 584-6278 or message our experts.
Stacey Wiles is the Director of Operations at Delta Payment Solutions. As a payments industry specialist, Stacey has over 20 years of experience working with some of the top payment and sales operations systems around the globe.
When she is not working with Delta co-op members to save money, you can find her on Twitter @paymentops.