Sno-cone, Crawfish and Firework stands- The Seasonal Merchants and Credit Card Merchant Services

Good Friday morning everyone. It’s that time of year again,

sno-cone’s, crawfish and fireworks stands start popping up in many states. During that time, many of these seasonal businesses will process a reasonable amount of volume, and they all need
our credit card payment processing services.

Similarly, in early September Halloween stores open and in November we see an influx of Christmas tree lots. They too will do a reasonable volume and will close after about a month and a half.

Every year I ask myself this same question, is there a value in signing these types of seasonal merchants? Every year I struggle with the answer.

When I ask others this question I get a wide range of answers. On one side of the spectrum people say that they provide revenue during the months they are open, and something is better than nothing. On the other hand are those who claim the ongoing residency expenses as well as the acquisition costs exceed any revenue earned.

I can see both sides of the argument. Dealing in seasonal merchants is challenging. There are once a year charity events, conventions, certain ski lodges and others who have times when they have no reason to be open. Since the demand for these types of credit card merchant accounts isn’t going away, I’d like to share some basic truths that will ensure the merchant level salesperson sufficient revenue without incurring costs when the merchant is closed.

Your cost of acquisition must be covered in the merchant’s selling season – regardless how short. Since it’s less than 12 months for these types of merchants, you must charge more for credit card payment processing services.

For example, if you calculate that your overall cost of acquisition is $100 (which includes your sales time, your fuel to and from the merchant, and any other soft costs), a merchant open only one month must generate more than $100 to cover your costs and make a profit.

Some seasonal merchants own their own equipment. Thus they are covering the costs for their credit card merchant accounts. However, others may ask for loaners or rentals. Ideally, merchants will own their own terminal and they can be reprogrammed.

Some merchant salespeople may be tempted to loan them a terminal they have around. This might sound like a good idea but what happens if they get a request for a refurbished terminal exactly like the one they loaned to the seasonal merchant?

Oh the questions to ask ourselves.

Since a seasonal merchant is a short-term revenue source, the revenue earned should not be seen as basic revenue. Instead, it should be considered as “bonus” revenue.

This is an important truth because seasonal merchants add minimal value to your overall residuals. In other words, should you one day look to borrow against your residuals or even sell your residuals, seasonal merchants are normally discounted or excluded from a value calculation.

When you abide by these truths, seasonal merchants can have value. Just remember, once the season is over, make sure that their credit card merchant accounts are either put on seasonal status or closed. Otherwise the merchants may receive statements and monthly fees. When that happens you will have upset merchants and possibly even expenses that end up being charged to you.

Seasonal merchants have their place in a portfolio, but only if you follow these basic truths.

Do you have any season merchants in your portfolio?

I’m curious to hear how they fit into your sales strategy for credit card processing services.