Happy Wednesday and welcome to Week 2 of our “What Would You Do?” series!
This week, we have a classic scenario involving new business owners and the sometimes-confusing world of payment processing.
The Scenario:
A small coffee shop, processing under $15,000 per month with an average ticket of less than $15, has just changed hands. The new owners have never run a business or accepted credit cards before. They’ve inherited a Clover POS system, which comes with its own monthly rental and software fees, and they are on a dual pricing model.
The sales professional managing the account is facing a challenge: the new owners are confused and frustrated by the fees they’re seeing. They are already proving to be a handful and are hinting that they might look for another payment processor.
The Million-Dollar Question:
What should the sales representative do?
- Option A: Move them to an Interchange Plus (IC+) pricing model?
- Option B: Add a transaction fee?
- Option C: Allow them to move on and find another provider?
Let’s Break It Down:
This is a delicate situation that requires a mix of education, patience, and smart business sense. Here’s my take on the options:
- Option A: Move them to IC+? This is a strong possibility. While dual pricing is often positioned as simple for the merchant, the separate fees and the way they are presented can still cause confusion, as we see here. Interchange Plus (IC+) pricing, on the other hand, is known for its transparency. It separates the processor’s markup from the actual interchange fees charged by the card brands (Visa, Mastercard, etc.). For a business with a low average ticket, an IC+ model with a small, fixed per-transaction fee could be more cost-effective than the percentage-based fees of other models. The key here would be for the sales pro to take the time to thoroughly explain how IC+ works, showing the owners exactly what they’ll be paying and why.
- Option B: Add a transaction fee? This is likely the worst option. The owners are already upset about the fees they’re paying. Adding another fee, even if it’s meant to offset other costs, will almost certainly be met with more frustration and could be the final straw that sends them packing.
- Option C: Let them go? This should be the last resort. While these new owners are described as “a handful,” they are also new, inexperienced, and likely overwhelmed. A good sales professional should see this as an opportunity to build a long-term relationship by being a trusted advisor. Giving up on them without a genuine effort to help will not only result in a lost account but could also damage the sales pro’s reputation in the local business community.
My Recommendation:
My vote goes to a modified Option A. The sales representative should sit down with the new owners and take an educational approach. They should:
- Acknowledge their frustration: Start by letting them know they are heard and that it’s normal to have questions about these complex fees.
- Explain the current fees: Break down the Clover rental/software fees and the dual pricing model in the simplest terms possible.
- Present IC+ as a solution: Frame the move to Interchange Plus as a way to increase transparency and potentially lower their overall costs. A statement analysis comparing their current costs to projected IC+ costs would be a powerful tool here.
- Set clear expectations: Be upfront about all potential fees so there are no surprises down the road.
This approach turns a difficult client situation into an opportunity to build trust and demonstrate value beyond just processing payments.
Bonus: Tips for Working with First-Time Business Owners
Dealing with new entrepreneurs requires a special touch. Here are some ideas to help build a successful partnership:
- Be a Teacher: Don’t assume they know industry jargon. Take the time to explain everything clearly and simply. Use analogies they can relate to.
- Practice Patience: They will have a lot of questions, and they might ask the same question multiple times. Be patient and understanding. Their business is their baby, and they want to make sure they’re making the right decisions.
- Provide Resources: Point them to helpful resources like the Small Business Administration (SBA) website, local Chamber of Commerce events, or even your own blog posts and guides. This shows you’re invested in their success, not just their processing volume.
- Listen More Than You Talk: Understand their goals, fears, and what they hope to achieve with their business. The better you understand them, the better you can tailor your services to their needs.
- Be a Leader, Not a Boss: Guide them through the process. Instead of just telling them what to do, show them how it’s done. Building a strong relationship based on trust will pay dividends in the long run.
So, what would you do in this situation? Let me know in the comments below!
Happy Selling,
David
Payment Lynx Daily 