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As various forms of Cash Discounting and Surcharging become more mainstream, larger merchants are showing interest.  These accounts generate life changing residual income, if you can overcome the challenges of selling multiple decision makers and implementing a compliant program across hundreds of locations.  Our sponsor, Dynamic Merchant Processing, specializes in these accounts and has a team of experts to back them up.  Learn how they are closing monster merchant accounts and generating massive monthly margin.

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Selling cash discounting to enterprises is one of the most exciting opportunities in the merchant services space. The residual opportunities from one deal alone can be life altering.
 
Let’s do the math, using the example of a QSR chain that does $100 million in annual card sales. This is typical of a QSR with 100+ locations.  Assuming we price the merchant at 3.5% on card transactions with pass-through costs of 2.5%, this is 100 basis points of margin. An account like this can generate $1,000,000 a year in margin. Even at a modest residual split, this is more than a good agent would typically earn in a year, servicing dozens of individual small merchant accounts.
 
                                  $100,000,000 X 1% (100 Basis Points) = $1,000,000
 
The challenge of selling to these enterprises is nothing like the sales with which most reps are acquainted.  There are layers of bureaucracies to be navigated before proceeding, even if there is an initial “yes.” In fact, getting that initial “yes” may be the easiest step in the process.
 
Dustin Wilkins, President of Dynamic Merchant Processing, is the only executive I know in the industry who is building a book of business on these monster accounts. He’s put together a team of skilled professionals focused completely on getting these deals across the finish line. 
 

“I never could have pulled this off on my own,” Dustin told me. “It’s more than selling. It’s more like project management. There are so many steps and sign-offs that you never would imagine if you were selling a local pub.”

 
 

The Opportunity


Let’s begin by defining the market. For the purposes of this publication, I am assuming a  monster merchant is any company or franchise that processes at least $50 million a year in payments. The most obvious examples are quick service and fast casual dining food chains. 
 
There are about 50,000 quick service restaurant chains in the United States. Fast casual dining chains total about half that number. 
 
Each of these businesses has dozens, if not hundreds, of locations generating billions of dollars a year in sales. Yet many of these restaurants struggle with challenges like the financial repercussions of the Covid-19 pandemic, rising food costs, and the need to pay more to retain good employees – all of which place extreme pressures on profit margins.
 
Dustin, during a recent Merchant Sales Podcast, told me about a QSR with $80 million annually in processing that he recently set up on cash discounting. “It was a slog,” he said. “It took months of meetings, selling various stakeholders, and then working with legal and IT teams to roll out the program without a hitch.”
 
But when all was said and done, the chain was realizing annual savings more than $2 million, and Dustin had a significant annual residual stream from that one client alone!
 

The Demand

 
Processing fees are a major expense for businesses that accept card payments. In fact, yearly totals paid by monster merchants such as large restaurant chains, far exceed the yearly revenues at most independent businesses. 
 
Obviously, no CEO or CFO worth their salt would pass an opportunity to eliminate that big an expense. But then, you don’t know what you don’t know. And a lot of monster merchants still don’t know about cash discounting. “Once there is awareness,” Dustin explains, “demand quickly follows.” 
 

“My first deal came from a referral partner who has nothing to do with the credit card world, but he loves making introductions. He introduced me to the CEO of a company that operated a chain of restaurants,” Dustin said. “When I explained the value cash discounting could deliver to his bottom line, he was sold. It was then time to get buy-in from other key executives, including the CFO, general counsel, and the CTO.”

 
The deal eventually went through, following months of planning and implementation steps. The company is now saving millions of dollars a year in processing costs and realizing significant improvements in gross margins. Dustin got wildly lucrative residuals, and the best kind of referrals an ISO/agent could ask for: a satisfied customer and willing champion of cash discounting.
 
Now, Dustin regularly calls on merchant accounts with as many as 400 locations. “We’re seeing phenomenal interest. Eighty percent of the time, after showing them the anticipated effect on their bottom line, we walk away from the call with a ‘yes’ or ‘maybe’,” he said.
 

The Challenges

 
Closing a monster merchant account is unlike getting a “yes” from a small business. A whole different mindset and skill-set is necessary. 
 
These are not the kind of deals a rep finds by knocking on doors. Dustin says he does most of his prospecting remote by:
  • gathering referrals, 
  • placing introductory calls, 
  • at times making presentations via Zoom. 
These are not the kind of deals where you get a “yes,” then return a few days later to install a device. Even if you get an initial “yes” from a monster merchant (perhaps from the CEO or CFO), there are other stakeholders to be sold on the idea and a multi-layer implementation process that must be followed. 
 
The stakeholders and processes also differ.  These depend on whether you’re dealing with a corporation which owns and operates all the locations, or a franchise business. 
 
Corporations are simpler to sell.  There is one set of decision makers who determine how, when, and where the program gets rolled out. 
 
Franchisors wield a lot of control over franchisees, but not total control. They can recommend that franchisees implement cash discounting, but each individual franchisee still needs to be signed and boarded. Of course there is a significant benefit for the ISO/agent in having the support of the franchisor’s recommendation.
 
Alternatively, a franchisor may oppose or be unaware of cash discounting.  However, an individual franchisee can implement cash discounting anyway, hoping improved financials make the franchisor and other franchisees take notice. Here again, an ISO/agent benefits from the credibility of the successful implementation of that franchisee and, hopefully, the franchisor’s buy in.
 

“These businesses want to know others are doing cash discounting before they will commit,” Dustin explains. “Once they see others doing it and the potential savings, getting a “yes” is easy. But that is just the first step in what can be a complicated boarding process.”

 
Here’s who needs to be sold:
 
  • The CEO is ultimately the final decision maker, so that’s a good place to start. Getting an initial “yes” from the CEO doesn’t make the deal a shoe in, but it does open channels of communications with other stakeholders. 
  • The CFO will want to run the numbers and get answers to questions around the handling of sales tax, reconciliation, the impact on accounting systems, and, of course, revenues.
  • Legal will want answers to questions about compliance with state and federal laws, as well as card brand rules. Unlike small merchants, these monster merchants won’t be willing or able to fly under the radar. Answers to these questions, as well as a plan for presenting the program to customers, must be communicated throughout the organization. 
  • IT needs to understand and make accommodations for implementation. They are not going to be keen on replacing existing POS systems, and integration can be complex. Staff resources need to be allocated, and there needs to be an integration plan detailing responsibilities of various parties in every step of the process.
Once there’s buy-in from all stakeholders and an implementation plan is in place, a cash discounting program typically gets rolled out a few locations at a time. This is a very hands-on process. 
 

“You need to have skilled teams of boots on the ground to ensure the switch to cash discounting occurs without a hitch. With this kind of money at stake, there’s no room for errors,” says Dustin. “I strive for perfection all the way until the last location is up and running.”

 

Conclusion 

 
Selling monster merchants on cash discounting isn’t for everyone. It takes experience and know-how – the kind of experience and know-how someone like Dustin brings to the table.
 
Dustin has learned a lot from boarding monster accounts. For example, the importance of being up front about potential problems, such as required IT resources and the potential for customer complaints. These need to be addressed in tandem with the savings and bottom-line improvements to be realized from a cash discounting program, Dustin explains. Not only will prospects gain a better understanding of cash discounting, but being honest about everything up front makes for stickier customers. 
 
Dustin has made significant investments in staffing and other resources needed to manage all the moving parts involved with implementing cash discounting at monster merchants. 
 
Now Dustin wants to grow his referral network. He wants to talk with ISOs and agents that come across QSRs, table service chains, even large B2B merchants, that could benefit from a cash discounting, or even surcharging program. 
 

“The name of the game is getting leads. Once we have a lead, we can follow up quickly and get the program moving,” Dustin said.

 

“I know there are smaller ISOs and agents out there who are eager to sell cash discounting to monster merchants, but they don’t have what it takes to get a deal across the finish line. I can come in with my expertise to handle the negotiations and other moving parts,” Dustin added. “I have the experienced staff and partnerships in place necessary to pull this off.”

 
The potential payout for the referring ISOs/agents: Generally, these monster merchants will generally charge 3.50% to their customers for the Non-Cash Adjustment. The passthrough costs for interchange and other assessments will average 2% to 2.5%, leaving as much as 1.5% (150 basis points) to be split between Dustin’s company and the referring agent / ISO.
 
I recently directed an ISO to Dustin that wanted to help a 440 chain with $600 million in annual volume benefit from cash discounting. Progress has already been made and once the merchant is up and running with cash discounting, the ISO will be collecting a huge monthly residual check.
 
Monster accounts don’t come along every day. When they do, though, they typically make excellent candidates for cash discounting. The savings and bottom-line results are just too big to be ignored. Having a partner like Dustin to sell and implement cash discounting to these merchants and cut you in on the residuals, is more than a good idea. It’s an idea that can produce life-changing amounts of income.
 

“We’re not looking for every deal. We want those that make sense, for the merchant and for us,” Dustin said. “And if it does, it will make great financial sense for the referring ISO/agent.”


Get in touch with Dustin!

Dynamic Merchant Processing
Dustin Wilkins
O: 256-835-6001 x 702
M: 904-874-7714
dustin@dmprocessing.com