Outside Insights | By Gino Kauzlarich
In today’s economy, every cent counts and adding them to your bottom line is possible despite the economic doom and gloom reports. The following steps will increase your profits, either by boosting sales, reducing credit card fees and expenses, or blocking theft.
Take Checks
Checks are still widely used, especially among older customers. If you haven’t been accepting checks, start soon. There’s equipment that will scan the check as quickly as a credit card, measure them against a nationwide database of bad check writers, electronically deposit the money, and guarantee you receive your funds within a few days. In addition, the cost is typically lower than for credit cards and could add 10-15 percent to sales—possibly more if seniors make up the majority of your customers.
Accept all Cards
Of course you already accept Visa and MasterCard. What about Discover and American Express? The latter, in particular, generally accompanies larger transactions. If you’ve hesitated because the fee is higher, reconsider—the difference might be a paltry one percent or so, and because American Express transactions are often larger than those of other cards, you’ll make it up in gross profit. Furthermore, if you’re known for accepting all forms of credit and debit cards, your customers will probably be more likely to come back.
Do Your Research
Most merchants think their fees are 1.69 percent plus $.19 because that’s their qualified rate on a tiered pricing program. But often fewer than 20 of 100 transactions receive the low qualified rate and all the rest downgrade and cost one, two, or even three percent. Researching alternate programs that offer different interchange rates could end up saving more than you think.
Insist on Understandable Statements
You or your bookkeeper shouldn’t have to scratch your heads over a complex credit card statement that just doesn’t add up. A few companies have made extraordinary efforts to simplify these reports. You should be able to reconcile your statement and rates in no more than 15 minutes.
Get Reports by Internet
Don’t wait for the post office to deliver a letter disputing a charge. With Internet reporting, you will know within 24 hours, allowing you to aggressively defend against chargebacks. This type of quick action will increase your success rates and reduce your losses.
Don’t Be a Victim
Use the Card Validation Value and Address Verification System. They are highly effective fraud screens proven to reduce losses, and when you use them correctly, you obtain the lowest possible discount rate.
Also, avoid hackers by being PCI compliant. There are mammoth fines charged to merchants who are hacked, and they can drive you out of business. Take the time to read Visa’s report on noncompliant systems, so you don’t get caught napping.
Cut Down Chargebacks
For Internet and phone orders, implementing the “Verified by Visa” or “MasterCard Secure Code” plug-in on your web site eliminates all cardholder nonauthorization chargebacks. Liability for these chargebacks is shifted away from you to the issuing card bank, and you qualify for the lowest discount rate available. This simple step could eliminate up to 80 percent of all chargebacks and increase your profits.