Are you a fast food lover? There seems to be good news for you during a tough economy. Some national chains are reducing their already low prices to encourage consumers to keep coming through the door and making the cash register ring. For example, McDonalds is rolling out a dollar breakfast menu early next year and Burger King has already been advertising a $1 double cheeseburger. These sort of items have been the dollar price range for over a decade or longer. Honestly, I’m a little surprised as I thought their margins were already tight. I assume they are hoping customers will buy other menu items that cost more and will make up for the slim profit margins. If you are a fast food restaurant owner and are considering this approach, be sure to keep in mind all of your costs, including fees. They can turn into a big percentage when dealing with very small purchase amounts. The bad thing is most consumers have no idea how much the restaurant is paying and if they did, I’m sure they would change their habits in some form or fashion. It is probably because I work in this industry and know all to well what merchants pay, but I have always personally been a cash paying customer when paying small dollar amounts.
I think now is a good time to look back at your success for 2009 and give thanks to all of your vendors and customers that helped play a part in it. Without your vendors, you wouldn’t have any products to sell. Without your customers, you wouldn’t have anyone to buy them. I do not know about everyone else in theindustry, but us here at Gotmerchant.com, we are very grateful. We are also looking forward to a prosperous 2010. The last few years have been tough on all businesses, including our industry. With some laws passing this year about consumer credit cards and all the talk or push for regulation from some merchants like 7 Eleven, we are glad and grateful nothing much has changed yet. No one can predict the future, but as of right now, things seem to be looking on a more positive note. Hopefully, 2010 will be a much better year for the economy as a whole. So while you are spending time with your families this holiday season, give thanks and be glad your business survived another year in this tough economy. If you are able to make it through this economy, think of what you will accomplish during a thriving economy!
ClickPayRent.com is a site that is designed to reward renters if they pay their apartment complex electronically instead of a check. Instead of writing a check, they can pay with their credit card and receive reward incentives from their credit card company. Some of the consumers that used the service has stated that it is nice to receive rewards for a bill you must pay anyways. It appears that they charge the consumers $9 to use the service, which is not great. By paying a fee, I do not see how any rewards from your bank would be beneficial as the service fee is eliminating any benefits.
On top of charging the consumer, they charge the apartment owner a percentage while covering thefees themselves. ClickPayRent’s CEO made the comment that they struggled for a long time trying to find the right credit card processor. He mentioned it required extensive negotiations to find a processor that wouldn’t charge too much. I’m guessing he hasn’t ever heard of or was told about Interchange plus pricing. One thing surprised me is he found a provider that would allow him to surcharge the transactions. Since they are not a government entity, they are not allowed to add a surcharge to their transactions. Since it is all credit card based and cash isn’t accepted, I’m not quite sure if this would still fall under that rule or not, but it is a very fine line in any event.
Credit card fraud is big business. Where should the blame fall? Fraudulent transactions are twofold. Individuals are responsible or should be for the physical presence of their cards. When they lose their credit card, it places a burden on some unlukcy merchant. The second fold is the merchant. There are things merchants can do to help prevent fraud. One important technique retail merchants can do is ask for a customer’s ID when processing a credit card transaction. Keeping an eye on chargebacks is very important for any merchant. If you receive too many chargebacks, you will have issues with yourprovider. Retail merchants can also compare the signature on the back of the card to how they sign the receipt. If there is no signature line present on the back of the card, ask the cardholder to sign it. Also, watch their behavior, do they seem nervous or acting funny? A lot of fraud happens online too as making a fraudulent transaction at a retail store takes more guts than making a purchase on the Internet.
Today, I’m reviewing a relatively small shopping cart, called Open Mind. It is another company based in the UK and is only being used by about 500 merchants, so it is very small compared to other carts. You may be able to receive very personalized service though. In 2004, they were building customized carts for their merchants. A few years later, they decided to create a commercial platform that could be used by all of their clients. The cart is licensed based but does include one year of free hosting. You can also install it on any ColdFusion hosting server. In regards to pricing, I think it is very steep, at $500 US dollars.
One of its strengths is it is the only commercial cart available designed specifically for the UK, according to Open Mind’s CEO. US merchants could use the cart, but from what I can tell, it isn’t really suitable for them. Getting support International maybe troublesome. They do claim that the cart is fully PCI compliant. It doesn’t give the merchants the ability to store thedata, which has its own downsides, but it is for the best. This seems to be a nice cart for a company located in the UK, but not a merchant in the USA.
Groove commerce released an article today about the check out page for ecommerce sites that I found helpful. Heather made some valid points. She evaluated countless retailers and how their checkout page was setup. Many retailers had 5, 6 and even 7 pages to their checkout process. This isn’t something I have really thought about all that much, but it makes sense. How many pages you have during the checkout process can be critical. Pretend you are at the grocery store trying to checkout. How many obstacles would you put up with before giving up and leave the store empty handed? For online shopping, having to go through page after page to checkout, can be similar to that situation in a retail store. We all like everything to happen quickly and easily. Heather gave several examples of the shipping page and how it varied among 4 ecommerce sites. I totally could see how one form was much more appealing to fill out vs another. She gave an example of a site that asked for coupons or certificates on an exclusive page, which doesn’t warrant it. She also mentioned that many sites collect the information on a page that may or may not have any security logos. She made the comment that you should display these security logos before you even checkout, so consumers know that their information is protected before they even get started.
Many small business owners are struggling today. Some are working more than 60 hours a week. One example is Nathan who built up his Sure Signs business for 18 years. He was concerned with the level of involvement he has on a daily business and what would happen if he would disappear. His wife wouldn’t have a clue where to begin. Nathan starting looking at franchises, Fastsigns in particular. He took the plunged, invested $60K and reopened under the new name. The following June, he has his best month ever. Things have been slow during the fall, but Nathan said that was the best choice he has ever made. Nathan recommends you do extensive research and once you make your decision and go with it, there is no turning back. He also mentioned that since you are going with a big brand, that can come with some buying power when dealing with vendors, such as with your companies. I do not know the details, but I’m sure franchisees like Subway have some unbelievable deals. I think merchants should also ask themselves, what kind of service will I receive for the kind of pricing I’m paying. It may be great pricing, but you may be telling yourself, “I got what I paid for.”
Amex has been running a campaign recently targeting consumers that want to be more responsible with their credit card usage. Amex has always been known as a card that requires you to pay your ball in full, but do not incur interest charges and other bank related fees. That also means young people have never really been interested in them. That may have changed now. They introduced a card call the Zync Card. It comes with a small annual fee and consumers get to participate in their rewards program. The downside is not every merchant accepts Amex because Amex has always charged more in fees. I personally do not see much of a benefit with Amex when you have Visa & MasterCard that give out as good or better rewards. Plus, V/MC are the default cards, every merchant accepts them if they are accepting any type of card, whereas Amex is a luxury. That is why most consumers that carry an Amex card, also have a V/MC as too many merchants do not accept their card. Times are definitely changing and who knows what we will see in 3 to 5 yrs from now.
Maintaining good chargeback ratios should be on the minds of every merchant. If a merchant has one chargeback for every 10 sales they have, this isn’t good anyway you look at it. Visa/MasterCard both have chargeback monitoring programs to watch merchants that have excessive chargebacks. Finding yourself in one of these programs will come with hefty fines and having yourcompany terminate your account. MasterCard’s requirement for their chargeback program is 50 chargebacks and 0.50% of transaction volume in a calendar month. Visa’s is 100 chargebacks and 1% of transaction volume. MasterCard relies on the acquirer to self-report any merchant that meets their criteria. Whereas Visa does their own reporting. They use the merchant’s DBA name, volume and transaction amounts and are automatically placed into their program if they meet the criteria. It is recommend that all merchants keep aware of their chargeback ratios. If you have too many, you could find yourself in deep trouble or worse, without the ability to ever accept credit cards again. So regardless if you process $50K or $500 million a month, keep an eye on your chargeback count. The key here is to ensure customer satisfaction and avoid fraudulent transactions as much as possible.
What if I were to tell you that you could have earned frequent flier miles on your credit card for free? Apparently the US Mint was offering free shipping on bulk orders of coins. The consumers purchased the coins with their credit cad that gave them frequent flier miles. They would then take the coins to the bank to pay off the credit card. How much did it cost them? Nothing, besides some time & effort, but they earned a total of two million miles! It cost the mint and US tax payers around $6 to ship 500 coins and around $1 million worth of coins were shipped. That would make it more than $12K in shipping costs as well as the fees they incurred. How much value is 2 million miles? Around $40K! It’s a good thing the US Mint has put an end to this as it shows you there are some people will take advantage of anything if given the opportunity.