One supplier's card acceptance journey.

April 4, 2016 Lynn Larson

In the life of a card program manager, it is common to approach suppliers about accepting card payments. You initiate a call and are prepared to address the “why accept” question. What if a supplier surprises you by already being convinced? Instead of asking why, they want to know how. Smaller suppliers in particular might not know how to get started. Your ability to offer advice beyond “talk to your bank” could prove to be the pivotal action. For insider experience, I spoke with Rick Swartwood, CPCP, who went from card professional to restaurant entrepreneur (and card acceptor). Read on for his insights that could help you assist your suppliers.

Following his 16 years of Commercial Card experience—most of which were with the Lockheed Martin Corporation—and prominent industry participation, Rick pursued a lifelong ambition of opening his own restaurant in 2014. He is now seeking a return to the corporate world, whether working within a payments arena, procure-to-pay operation or shared services. His restaurant experience has given him a whole new perspective of what it means to be a card-accepting supplier. Email Rick or get in touch through LinkedIn.

Finding Merchant Services

While a supplier’s current bank is certainly one route to explore for merchant services, there are many other options. Finding them is probably the easiest part. Rick shared how, as a restaurant owner, approximately 20 different merchant services organizations “came out of the woodwork” to sell him on their card acceptance solution. If a supplier has not received any such communications, they could find options though a simple Internet search. Two popular search phrases are credit card processing and merchant services. However, in the business-to-business (B2B) payments world, it is critical to find an acquirer who specializes in this space.

Evaluating the Options

Like any vendor search, when selecting a merchant services partner, a supplier should be wary of any verbal promises by salespeople such as “no extra fees.” The written proposals always include various types of fees, such as: monthly service fees, add-on or pass-through fees, PCI compliance fees and contract opt-out charges.

Because each merchant services company had a unique proposal format, Rick’s biggest challenge was finding the fees within each proposal to make apples-to-apples comparisons. To make his process easier, Rick developed a standard list of questions and required each company to answer in the same order. Questions included:

Is your service based on a monthly statement processing fee or are the processing charges deducted on a batch by batch basis?
Is your service based on a fixed rate per transaction? If so, does the rate vary by card type?
Is your service based on a cost plus pass through charge? If so, what is the charge? Does it vary by card type?
When are the receipt funds available in my bank account? Does it vary by card type?
Is there a single receipt for all card types or multiple individual receipts based on card type?
Is there a cost to opt out of the contract?

This approach could help other suppliers who are new to card acceptance. When a supplier specifically needs B2B credit card processing, I recommend they also ask merchant services companies about their B2B capabilities and experience.

Having Buyer’s Remorse

Rick’s original merchant services choice was not his last for a couple reasons. For example, the availability of funds for one type of card became problematic. While the funds were supposed to be available within 48 hours, the reality was that it sometimes took 72–96 hours. In addition, another merchant services company proposed some financing of restaurant equipment if they could become the processor, so it made sense for Rick to change. See also my previous blog post about why some card acceptance relationships fail.

Suppliers should not be afraid to make a switch, but they also need to consider the financial repercussions of doing so.

Suppliers who are new to card acceptance and seeking a merchant services partner need to be wary of any offers that sound too good to be true.

Final Thoughts

Every supplier has different needs when it comes to card acceptance. For Rick’s restaurant business, 85% of payments, including server tips, were via cards. For these reasons, his priorities were low fees and quick availability of funds. Because he was paying servers’ tips in cash on a daily basis, a two-day lag for card payments was not ideal. For a non-retail/non-restaurant business like mine, I sought simplicity above all else.

The next time one of your suppliers seeks guidance concerning card acceptance, encourage them to:

identify their needs
understand the fees they could encounter and payment timing/availability of funds
shop around for a merchant services provider, especially one with experience in business-to-business (B2B) credit card processing

Access additional resources related to card acceptance.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…

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Turn ideas into a speaking proposal.

March 23, 2016 Lynn Larson

When you last attended an industry conference or even just reviewed an event brochure, what content holes did you see? This could fuel ideas for you to submit a speaking proposal for a future conference. In January, I encouraged readers to make 2016 the year to strengthen their professional biographies, mentioning the pursuit of speaking opportunities as one possible action. I expand on that now, offering some suggestions for the various stages of a speaking endeavor.

The Proposal

The second half of the year is generally when speakers are chosen for conferences the following year, so spring is a good time to think about this. Do not be intimidated if a speaking role would be new for you. Most conference organizers do not require prior speaking experience; the ultimate goal is having good content from a variety of individuals. Consider your past successes, including any challenges you overcame in the process. You can translate these stories into tips and advice for others.

Presentation Preparation

If you are selected as a speaker, above all, ensure your presentation aligns with the published session description, so attendees are not disappointed. To make your content stand out among the dozens of other presentations, check out these two previous blog posts:

Conference Arrival

Use your session as an icebreaker during networking events. As you meet fellow attendees, share that you’ll be doing a presentation on “X.” Ask about their experiences with the topic to gain additional perspectives that you could add to your session.

What experiences or expertise do you have that could make a great presentation?

Final Thoughts

If you will be attending a conference this spring like I am (in my case, NAPCP next month), this might make it easier to think of ideas for a future session you would like to propose. However, regardless of your speaking intentions, be sure to make your next conference experience count by planning ahead. This was something I addressed in a post last year and I found it useful to re-read my own words.

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Premiering a new rebate idea.

March 14, 2016 Lynn Larson

You know the plot. Card issuers extend rebate incentives, based on various criteria, to qualifying end-user organizations and the payout is set to occur on some type of schedule. I have written about the pros and cons of rebates before, but this time I offer a twist on the script of how issuers offer these incentives. An article in The New York Times this month, outlined below, provided the inspiration.

There is nothing wrong per se with the current rebate process. Yet, too many organizations do not fully take advantage of Commercial Cards today, even though doing so can result in numerous benefits, including the added bonus of rebates. In the past, I explored how risk psychology contributes to Commercial Card aversions, so maybe rebate psychology is an answer.

Psychology at Work

The article, Paying Employees to Lose Weight, described research on the success (or failure) of monetary incentives for getting employees to be healthier. Many things do not work well, such as delaying financial rewards too far into the future. I wonder if Commercial Card programs eligible for quarterly rebates excel more than those that are on an annual schedule. The real story, however, is what does work with such plans.

In one study, employees were in a group setting and only the group members who met monthly goals received rewards. The others missed out due to their own inaction, but they saw the success of their peers.

In a different study, each employee was set up with money in an account, which would be subject to daily deductions if the employee did not meet the designated goal (in this case, walking a certain number of steps each day). This trumped a separate group who could earn the same amount of money for meeting the daily goal. Losing money proved to be a bigger motivator than earning money.

Incentives that push under-performing card programs in the right direction are worthy of red carpet treatment.

Article referenced: Paying Employees to Lose Weight by Mitesh S. Patel, David A. Asch and Kevin G. Volpp

Applying the Lessons to Rebates

Imagine an issuer establishing a rebate dollar amount for an end-user client at the beginning of the rebate period. It would be based on the:

criteria of the issuer’s rebate incentives plan to which the client previously agreed
client’s Commercial Card goals and identified opportunity

To keep things simple from an accounting perspective, the issuer would not actually deposit the target rebate amount in an account for the client, but they would provide related reporting. Let’s assume an annual rebate schedule. After each cycle ends and the client has paid the balance, the issuer’s report to the client would show:

a “deposit,” increasing the amount in the account if the program was on track to surpass the original rebate target or
a “withdrawal,” reducing the account balance if the program fell short

Consistently low-performing programs would see the target rebate dwindling. Others might see a mix of deposits and withdrawals. Only the highest performing programs would see regular deposits.

The issuer could pair the above with additional reporting to the client that shows unidentified similar clients and their monthly status (advancement or decline).

This is my notion of a workplace psychological thriller. While it would not capture the attention of the movie industry, it could help push under-performing card programs in the right direction.

It is certainly possible that someone else in the industry has voiced (or even implemented) similar ideas of which I am unaware, so I encourage blog readers to comment below. I’m interested in what Frank Martien of First Annapolis Consulting has to say on the topic of Commercial Card rebates, as he has covered it regularly over the years. I respect his work and plan to attend his related session at the NAPCP conference next month.

For more on rebates, visit the related webpage.

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