26 Feb The Potential Consequences of Choosing the Wrong Processing Partner
It’s common that a bank will partner with a processor to provide merchant services for their customers. There’s no doubt that this can be a worthwhile venture for your bank. If your program is supported by the right processing partner, it can provide a substantial amount of non-interest income. But not all providers will be a good fit for your bank, and choosing the wrong partner can have unforeseen consequences. Here are just a few of the pitfalls of partnering with the wrong processor:
Attrition is an enormous issue for the merchant services industry. In fact, the industry retention average is only 70% annually. That means, if you have 500 merchants in your portfolio, you’ll need to sign up 150 new merchant accounts every year just to break even. Conversely, keeping an existing customer is easier than finding a new one, and can greatly increase your revenue. For every 100 merchants in your portfolio, every 5% decrease in annual attrition adds an average of $10,800 in annual revenue.
High attrition rates are typically accompanied by low or nonexistent support from your processor. This is doubly problematic, as you’ll be losing merchant accounts and servicing the accounts you have retained—leaving little time to make up the difference. So how can you avoid this minefield in the first place?
First, before you choose a merchant services partner, ask them about their retention rates. The key here is to aim high, not to find an average partner with a 70% retention rate. Look for a partner with 90% or more retention. This is a good indicator that said processor prioritizes customer service and your partnership. With a retention rate of 90% or higher and a portfolio of 500 merchants, you’ll only need to sign approximately 50 new merchant accounts a year to maintain your portfolio. This leaves tremendous potential for growth.
Most banks offer merchant services to add another product line that will strengthen relationships with their customers. Unfortunately, with the wrong processor, that opportunity can be twisted into something that will instead damage your hard-earned reputation. Any negative experiences customers have with your partner will poison your existing relationship.
When your bank chooses a merchant services provider, you’re recommending their services. If your merchants call customer service only to wait on hold for an extended period of time or reach a robot that says, “input your 15-digit account number,” that reflects poorly on you. It won’t matter that your processor is technically a third-party, because you recommended the service.
Before you choose a partner for your merchant services program, make sure they’ll give your merchants the same stellar service they’d receive at your bank. Look at reviews from current customers. Better yet, call their customer support number yourself. From there, ask, will this partner help me retain customers, or will they drive them away?
The processing industry is notorious for overblown prices and confusing contract language. Before your bank chooses a partner for your merchant services program, make sure you’ll be offering your customers competitive pricing. If your merchants aren’t priced competitively, they might very well take their business elsewhere.
Unfortunately, many processors inflate their own profit by skimming from your bank’s and overcharging your merchants. They’ll often try to pull the wool over your eyes by offering a higher revenue share and hiding how they upcharge. Be warned, an offer of 100% revenue sharing is always a red flag. It sounds good but consider how a company could keep its doors open while retaining zero profit. They couldn’t, and that means there’s a catch. For a full explanation on the shifty practice that can drive away your merchants and cut into your profits, check out this article.
If you want your merchant services program to be successful, it’s vital that your processor has a high level of transparency. Don’t be afraid to compare multiple processors to get an idea of how competitive your pricing really is.
Maybe your bank already has a merchant services program that isn’t growing like you want it to. Or maybe you’re just beginning your search for a processing partner. Either way, make sure that you carefully consider your options before choosing a partner. Your provider should be just that, a partner. Shifty sales tactics, inflated pricing, and low support have no place in a business relationship.
Choosing the wrong processor can have dire consequences, so how do you know when you’ve found the right processor? A good place to start is considering these 8 things your bank should look for in a merchant services partner. Above all, look for a provider that will treat your customers the same way that you do.
BASYS Processing as a business partner
At BASYS, working with banks is what we do best. Does your processor offer the best service and support? If not, call us at (800) 386-0711. Let’s talk about creating a true business partnership that will help you meet and exceed your goals for your merchant services program.
BASYS Processing features:
– 90% + Customer Retention Rate
– Live operator when your merchant customers need support – no automated voice systems
– Dedicated relationship manager for questions and concerns
– Proactive contact with every merchant to walk through the annual PCI process
– In-house PCI Team to assist with questions and concerns
– Founded by a family who previously owned a bank
– Track record of successful bank partnerships
– Thorough Market Analysis followed by mutual plans and goals to grow your portfolio
– High-quality service mentality, similar to your bank
– Vested interest in protecting your bank’s hard-earned reputation
– In-depth initial bank training
– On-going bank training via weekly call and boot-camp programs
– Open line of communication between BASYS, you, and your customers
– Quick response time for your questions and concerns; you are a priority
About BASYS Processing
BASYS Processing provides credit card and debit card processing services, and solutions that include terminals, virtual terminals, e-commerce, mobile, and point-of-sale, customized to fit any need. Banks, associations, and software partners depend on us to strengthen their reputations and relationships with their customers by providing remarkable service paired with ultimate flexibility and pricing. Merchants depend on us to make accepting credit cards and debit cards convenient, safe & affordable. BASYS was founded in 2002 on one philosophy: to take care of our merchants, partners, and employees so they never want to leave. We work one-on-one with our customers to design the perfect solution. BASYS is Personalized Payment Processing.
Learn more at basyspro.com, and connect with us online at: