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Merchant Sales Insight

Winning the Battle of Attrition – Merchant Services

CLICK HERE to Download the PDF Most Agents believe that there are only two options. […]

CLICK HERE to Download the PDF

Most Agents believe that there are only two options. They can sell a full feature point of sale system that will lock in the merchant, or they can sell a cheap stand alone terminal with no real features, other than payment processing. There is a third option! You can offer a good solution to the merchant that is simple, compared to a Point of Sale or Integrated Payment setup, that also has features they will love, including omin-channel. Our sponsor for this edition of the Merchant Sales Insight is Valor Paytech. Visit https://www.ccsalespro.com/valor to learn more. 

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Customer attrition is a problem in every business, and merchant acquiring is no exception.  If you are really good at selling merchant services and meeting client needs, chances are you’re probably still losing between 10% and 15% of your portfolio every year.  Attrition rates as high as 30% or 40% are not uncommon in this industry 
Costs associated with attrition run high.  When a merchant account leaves for another processor, it can take up to three new merchant accounts to recoup attrition and new client acquisition costs. 
One old-school strategy for minimizing attrition and attracting new merchants has been to offer lower pricing.  But that strategy has run its course.  If the only benefit you can provide a merchant is better pricing, the account is vulnerable to the next agent who is willing to make less on the account or is selling on services and not price alone.

Many ISOs have embraced a strategy of selling full-featured POS systems, integrated payments, and software-as-a-service solutions that make merchants stickier.  That’s not a bad strategy.  But these ISOs are leaving huge revenue opportunities on the table by ignoring the needs of a large swath of merchants. 
That swath includes millions of small business owners who are perfectly content using stand-alone terminals.  Their priority is selling stuff.  The simpler it is to sell and ring-up sales, the better.  We all visit these merchants from time to time.  Efforts to sell them on anything more sophisticated are often rejected outright. Independent coffee shops, hair salons, drycleaners, and auto repair shops are just some examples.  
I recently visited a small sandwich shop that was accepting card payments through a Square countertop device.  When I asked the owner if she had ever considered installing a POS system, she scoffed, “I have guys in here all the time trying to sell me on more sophisticated technology, but I don’t need all those bells and whistles.” 
Simplicity counts for a lot with these merchants, but so does the ability to lower overhead and attract more business.  Truth be told, if these merchants were offered the opportunity to keep using stand-alone devices with additional functionality, many, if not most, would say, “yes.”  And when the amount of extra money your platform is making a merchant outweighs any possible savings a competitor offers that merchant, you will always win.

Three platform features emerge as necessary to pursuing this game-winning strategy:
·         Omni-channel capabilities 
·         Customer engagement tools 
·         Cash discounting 
Let’s dig a little deeper into each of these.

Omni-channel is the Future, and the Future is Now. 

The retail payments scene has changed a lot since early 2020, when the Covid-19 pandemic was declared, upending our business and personal lives.  Over the past two years, the transformation in consumer preferences has leapt years ahead of pre-pandemic levels. 
Reports say that U.S. ecommerce sales saw ten years of growth during just the first half of 2020.  Many brick-and-mortar merchants who were unwilling/unable to make the pivot to accepting online orders and payments didn’t make it through the pandemic. 
An omni-channel payment solution provides merchants with the ability to accept payments through multiple channels, using the same gateway.  This makes supporting new business models much simpler.  A casual dining restaurant that seats diners and accepts in-person card payments, as well as offering online ordering for takeout and/or delivery, for example, will benefit from omni-channel payment capabilities. 
These merchants want simplicity, but they need to be able to change with the times and customer demands. This makes an omni-channel solution crucially important. 
As merchants add more ways to accept payments, their customers become stickier.  And if their customers are stickier, your merchants become stickier, because they are making more money.  That means you, as their ISO/agent, also make more money on added processing volumes.  Everyone in the value chain wins.
Let’s examine what’s available. 
Stand-alone terminals –  An out-of-the-box solution for situations where a merchant wants to be up and running with card acceptance fast.  The drawbacks – the potential for keying and communications errors.  Plus, the small screens make it difficult to display all pertinent transaction information for customers. Merchants relying solely on stand-alone terminals are prime pickings for competing agents offering cash discounting. 
If you are selling stand-alone terminals, you need a device that overcomes these obstacles and has features merchants need. 
·       Full-transaction information displays, including custom information like non-cash adjustments. 
·       Digital copies of receipts, including customer signatures, that get stored in the cloud and are accessible through individual merchant portals.  This eliminates the hassles and risks of device-based storage. 
·       Cloud-based storage and software for increased data security, service continuity, and mobility.  All that is needed is access to the internet.  Then the merchant can keep an eye on operations from just about anywhere. 
·       Auto-connections to ensure ongoing operations, even if the merchant’s standard connection fails. 
·       Cash discounting made simple. 
·       Built-in customer rating system to help fine-tune products and service. 
·       The ability to batch out from anywhere. 
Smart terminals. These Android-based portable devices deliver extended coverage with wireless connectivity options.  The large screen display is well-suited to pay-at-the-table applications. 
What to look for in a smart terminal: 
·       Full transaction information displays so customers know exactly what they are paying. 
·       Simplified bill splitting, with terminals automatically splitting total bills evenly amongst each card tendered.  A must-have for restaurants. 
·       Contactless payment options, including digital wallets like Apple Pay, to help future-proof the device and the relationship. 
·       The ability to add a cash discount/non-cash adjustment or surcharge percent to tips. Without this feature, merchants are on the hook for that charge on all tips. 
Virtual terminal. With these web-based applications, merchants can process transactions without dedicated hardware or phone lines.  Some obvious use cases are ecommerce and taking orders and payments over the phone.  Consider capabilities that go beyond simple card-not-present support: email and SMS invoicing, Level 2 and Level 3 options, inventory management, and dynamic transaction descriptions. 
Mobile. Mobile, like contactless, has gained a lot of converts during the pandemic.  By number, mobile payments grew 40% just in 2020, and average spend was up 10%.  Apple had the largest share of market with 44 million users. Nearly the same number of consumers use mobile payment apps on various Android devices.  Any mobile payment offering needs to support both, as well as contactless options.  Mobile dongles, with powerful batteries and Bluetooth, support merchants on the go. 
e-Invoicing . When invoices are received more quickly, a business gets paid faster, particularly if the invoice includes a link to an online payment portal.  e-Invoices make this possible.  Customers initiate payments from their own devices, making the process secure and contactless.  It’s a lot faster and less prone to error than taking card details by phone.  Merchants should be able to access and manage information on all paid transactions via a portal. 
Text to Pay.  This is e-Invoicing for folks who like to do everything with their smartphones.  Text to pay makes payments convenient and touchless for merchants and their customers. Customers enter their card numbers or retrieve a card kept in their mobile wallets.  Merchants receive payments in minutes rather than days or weeks, making text to pay a high value offering. 
 Valor PayTech, the sponsor of this Merchant Sales Insight, offers countertop, mobile, and virtual terminals that meet all these requirements.  Merchants can effortlessly adopt new business models, which in turn, empower them to better serve their customers and drive better profitability.  And more profitable merchants make for more profitable merchant portfolios.

Sticky Customers Drive More Revenues. 

Powerful customer engagement tools will change the ISO/agent sales pitch from shaving basis points off processing costs to increasing revenues through customer loyalty. 
One of the reasons I asked Valor PayTech to sponsor this Merchant Sales Insight is because of the marketing and promotional tools built into their payment solutions.  Merchants leveraging Valor’s technology can identify customers based on customizable filters, such as number of visits and shopping patterns.  And they can send special offers to encourage repeat visits through multiple messaging media, including receipts and SMS.  They can easily add promotional messages and images to receipts.  And they can get instant feedback from customers through an easy-to-use rating system incorporated into electronic receipts. 
Customer engagement and retention is a core focus of retailers large and small. Good customer engagement makes customers feel like they matter.  Customers who feel they matter will buy more, will return more often to the business, and are more likely to recommend that business to family and friends. 
If there ever were any doubts about the value of customer engagement, they have been dispelled by the success of Amazon, which has taken the practice to new levels. 
To compete effectively in today’s market, small merchants need customer engagement tools that are simple to use and integrated with their payment processing solutions.  Most don’t want and can’t afford complex email marketing platforms.  For these merchants, a payment processing solution that supports simple customer outreach (like automated email and SMS messaging) can be a real differentiator.

Valor PayTech’s makes customer outreach simple and effective. With Valor’s Engage My Customer tool, merchants can:
  • Identify lost customers – those who have shopped there in the past but haven’t been back.
  • Identify VIP customers, allowing merchants to demonstrate appreciation with concrete steps to engender continued loyalty. With 20% of customers typically accounting for 80% of a business’s revenue, losing even one loyal customer is not an option.
  • Instantly respond to negative feedback customers provide on electronic receipts. Consumers of all ages turn to the internet first when considering a new business or product. And research shows that 8 in 10 consumers will hesitate to shop at a business with bad online reviews. Valor’s Engage My Customer tool empowers businesses to stop bad reviews before they ever get posted online by taking concrete steps to improve a disgruntled customer’s experience.
Cash Discounting isn’t the Endgame. 
If you are an ISO or agent offering cash discounting, congratulations!  It’s one way to eliminate price from the sales pitch and prevent unnecessary attrition.  But it is not a surefire fix.  A new race to the bottom is beginning around cash discounting. 
Lately, I’ve fielded numerous calls and emails from agents concerned about competitors trying to undercut their cash discounting rates.  Frankly, I don’t expect this race to last long.  After all, the fees assessed transactions in a cash discounting situation aren’t paid by merchants; they are paid by the merchants’ customers through non-cash adjustments.  I’m not convinced merchants will be eager to switch processors just to shave basis points off the non-cash adjustments customers pay, especially if the cash discounting program is compliant with legal requirements and easy to use. 
I recommend leading with cash discounting but pairing it with a technology solution that includes at least one new feature the prospect is likely to adopt.  
For example:  If the prospect is still using a stand-alone, smart, or virtual terminal, lead with cash discounting paired with text-to-pay or mobile payment acceptance. If there is just one thing you can offer that their current processor is not offering, that’s a foot in the door. 
The cash discounting program selected, along with supporting hardware and software, needs to be fully compliant with fee disclosure mandates.  It should allow merchants to remove non-cash charges in one-off situations without having to re-initiate transactions.  If selling to restaurants and other businesses involving tips for workers, be sure your offering can support cash discounting on tips.
  Valor Paytech offers cash discounting support that is processor agnostic and capable of processing transactions initiated through any channel.  Valor Paytech terminals support dual MIDs, allowing merchants to choose between cash discounting and traditional processing as the need arises.  In a card-present environment, the devices display total sale amounts, taxes, fees, and total costs.  This leaves no questions in the minds of customers concerning what they’re paying for. 


I’m a huge proponent of cash discounting and, also, a big fan of POS systems and payments integration as an attrition avoidance strategy.  After all, the more hooks an ISO/agent has into a merchant account, the more difficult it is for that merchant to leave for another processor, even if the competitor pitches lower pricing. 
Merchants who are sticky based upon the solution set an agent sold them is the best strategy for fighting attrition.

 There are millions of small businesses that don’t feel the need for anything other than a stand-alone, smart, or virtual terminal.  These merchants have the same basic needs as the more tech-savvy:  they want to drive more sales by retaining and attracting customers.  However, they don’t want to feel they need a crash course in technology to get there.  Offering cash discounting paired with at least one, simple technology solution a merchant lacks is the way to go. Think in terms of customer engagement and new, simple ways to pay.

 Marrying an effective pricing strategy with technology that delivers added benefits and increased revenues makes for stickier, more profitable merchants, and enhances overall portfolio valuation. 
Valor’s processor-agnostic omni-channel gateway was built to help ISOs and agents acquire and retain more clients.  Its cash discounting solution, coupled with countertop, mobile, and virtual terminals to create a true omni-channel point of sale solution actually helps merchants make more sales.  Valor’s differentiated solutions include unique merchant portals, real-time monitoring of transactions, customer analytics, and easy-to-use customer engagement tools. 
·       Merchants are always updated and secure, 
·       Customer and transaction data is safely stored in and accessible via the cloud, 
·       They are positioned to benefit from increased customer engagement. 

GetIsoAmp.com How to Sell Merchant Services eBook GetIsoAmp.com

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