SharedTEAMS is a membership-based Shared Marketing Department and provides businesses with on-demand access to full scale marketing teams using their SaaS platform. In this case study learn how we built trust through transparency, low merchant processing rates, and ultimately reduced their processing fees, saving them thousands of dollars per month.
The problem, in their words
“Most of our membership fees are billed through credit card transactions. We were paying a very high transaction fee to our previous contractor because our industry and our higher-than-average transaction amount (around $800 per transaction on average) were flagged as higher-risk merchant services.
Additionally, there was an incident where the previous contractor conveyed that we were being placed on a lower rate, which did not occur. We were forced to take legal action to recover the funds that we were erroneously charged.
Therefore, we were looking to enter into a relationship with a merchant services provider that was transparent and upfront about their fees.” – David Lanagan, Founder
A case for transparency: When interchange fees hit your bottom line
During our discovery phase with SharedTEAMS, it was very apparent the merchant pricing they were getting was different from what they had signed up for and there wasn’t a clear resolution from their payment processor on the horizon.
Together, we quickly identified two main areas that needed to be addressed:
1. Finding an optimal processing solution: a customized solution that wasn’t going to cut into their profit margins (as they were previously paying a high fee for membership charge credit transactions);
2. Trust building: a supportive and transparent relationship where fees and costs are not only fixed but discussed upfront (due to their previous contractor’s lack of transparency plus an erroneous charge that even led to legal action).
Since 2007 our experience has indicated that even when clients and potential clients talk about pricing concerns first, like in the case of SharedTEAMS, price is never the real issue: clients want to work with partners who have their back. In contrast to the churn and burn cycle typical in the payments industry, our true focus is on building long-lasting relationships.
As we often work with small- and medium-sized service-oriented businesses in the online world—businesses just like SharedTEAMS—we know how much they rely on a satisfactory customer experience to make a lasting impression. Payment processing and the way we power merchant payments is an integral part of a positive customer experience and, these days, most customers prefer paying with credit and debit cards, which makes effective online business payment processing one of the key components of long-term business success.
While processing credit cards is not only complex, it can come with a myriad of hidden costs. Worst of all, as SharedTEAMS learned the hard way, not all processing service providers are as straightforward and ethical as they appear, it’s actually pretty common for fees to increase without notice AND, we’re not common. We lock merchant fees in so you don’t have to worry about fee hikes, we want you to focus on your business, your product, and future growth.
The main reason companies should consider interchange rates when accepting credit cards is that credit card fees ultimately come out of the bottom line. Each time a credit card payment is accepted, merchants pay two kinds of fees: a processing fee and a per-transaction fee, some of which go to the credit card company and some of which go to the payment processor.
Avoid processing hassles and high fees.
Education drives decision
As we continued to look into the SharedTEAMS needs to determine the most optimal solution, education around how different payment processing companies charge fees in different ways and how fees can also vary by acceptance method, was a major factor when choosing a payment processing partner.
In essence, interchange fees are formed around recouping costs and hedging against risk. In most cases, interchange fees are set as a percentage of the sale (anywhere from 0.05% to 4%), plus a flat fee component that sometimes reaches as much as .30 per transaction. For example, a swiped card, contactless payment, or inserted card payment all have lower fees because there is less risk for fraud.
Some merchant processors charge a flat fee—three percent, for example—regardless of transaction volume, which works best for companies with small transaction volumes. But those who transact a high volume each month with a flat-rate provider end up overpaying in fees because the rates are much lower with the Interchange Plus model.
Our fees consist of two parts. The first part of the fee is based on Interchange Plus fees, which are dictated by the credit card companies (and change often). The second part of our fee is a minimal monthly fee and transaction fee according to business type, we like to lock this one down.
As we value transparency, SharedTEAMS learned quickly our pricing wouldn’t increase over time. So instead of countless, unpredictable variations, where most companies in the industry are in a race to the bottom, our clients pay a constant, flat margin on top of the base interchange rate.
SharedTEAMS ultimately started to look for the best payment processing company because of price and poor communication that lead to a lack of trust. Understanding their needs we worked quickly to build a relationship forged on taking the right action for our new partner, ensuring their account would be handled both professionally and properly. This is how we roll.
Results
1. SharedTEAMS effective rate with National Processing is 3.46% versus 5.23%, the rate with their previous contractor.
2. Since switching to National Processing, SharedTEAMS has saved thousands of dollars per month in processing fees.
3. In contrast to other processing companies that may take several business days for the money to reach the client’s account, the client receives their money shortly after batching out.
Summary
“We’re very happy with National Processing as our payment processor. The quick funding has allowed us to carry less cash on hand and has helped us move quicker with projects that require funds. This has had a measurable positive impact on our operations.
We appreciate the transparency of pricing and the ease of communication with the sales rep. Transparency and customer service were the most appealing service features. The customer service has been excellent. Also, the flat fee structure was appealing since our previous merchant services provider was not able to provide us with direct answers regarding rates. The transition to National Processing has saved us thousands of dollars per month in processing fees.” – David Lanagan, Founder
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