Too often those involved in a particular industry are afraid to confront reality about the future of that industry. Credit card processing is becoming more and more of a commodity every day.
A Commodity as defined in Wikipedia, is a product or service with significant demand that the market treats as “equivalent, or nearly so, no matter who produces it.” More specifically, a commodity is something with almost universal demand (everyone needs it), but it is difficult to differentiate one service from another.
How to Sell Merchant Services in 6 Steps
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Electricity is a commodity. When it was first introduced, it was a novelty and very expensive to have installed and serviced. The up front costs and the differentiation between providers was enormous. The contracts for service were long term, and the government regulation was non-existent. To get electricity hooked up and started today usually costs nothing. There is never a long term commitment involved. And the government highly regulates the industry. This process is what inevitably happens to a service which has universal demand with service needed only in emergency situations.
When the credit card processing industry was born, there was a high up front cost for equipment, long term contracts, and no government involvement or regulations. Today most processors give the equipment out for free, require no long term contract, and the government has taken its first stab at regulating portions of our industry by the Durbin Amendment. Add to this the experience of most agents in the field, and you will learn that merchants today are motivated to buy primarily because of cost. There are many other things that go into the sales process. Most of these are simply to obtain enough trust from the merchant for him or her to believe you are telling the truth when you say, “My service is cheaper.” Before our industry takes a serious turn towards regulation or commoditization will be a few more years I believe. But I want to start preparing for this change now!
How can we add value and differentiate ourselves from the competition in this industry? What services would add value to our clients and keep them from switching to another provider based only on price? I believe POS System sales is the future for independent agents selling credit card processing. If you have ever tried to switch a client over from another service provider who had set up their POS System, you know just how difficult that can be. POS Systems provide a realistic way for us to provide true value to our clients. I offer training resources and partnerships in which you can participate to offer POS Solutions to your client base. In the mean time, here are some action steps for you to take:
1. Get as many Credit Card Processing Clients as you can while we are still able to differentiate ourselves based on price and local service over the next few years. The more clients you have, the more powerful your position will be in the future as our industry offers added beneficial services to the client base.
2. Start to familiarize yourself with the way POS Systems work. Go on www.google.com and search for POS Systems or POS Software, and look at our competition.
3. Be prepared to fully engage in new training resources and change what you are doing now over the next few years to include value added products and services to help you differentiate from the competition. One last side note: There are some processors who are either already offering POS Systems for free to clients who use their processing services or are thinking about making such an offer. I personally think this is a huge mistake; I do not recommend that you participate in programs like this. I was very close to making a deal with such a company. But after further consideration, I realized how illogical this would be. To make such an offer would be like the electric company who wants to charge you more for your electrical service in exchange for their providing you with light bulbs, a microwave, and an electric water heater. This logic just doesn’t make sense. Why would we offer the most valuable part of the equation for free?
As merchants gain a better understanding of credit card processing, they will learn how to lower our margins to the bare minimum. That is inevitable. But POS Systems which provide inventory management, accounting, advanced reports, off site access, and other valuable features should be presented as the most valuable part of the deal. Therefore, they should make up most of the profit. The credit card processing service should be only one part of a more complex and profitable deal – something we provide so cheap merchants would never want to switch (which we already do without offering POS Systems.) Keep in mind as an independent agent you can offer enormous value to the merchant by learning your different POS Systems and offering on-site training and technical support.
James Shepherd email@example.com
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