Does your business currently accept payments using the Bill Me later service in addition to credit card processing payments.  Bill Me later is currently facing a law suit over the interest rate they charge for their service.  The suit was filed by a former customer of Bill Me later.   The suit is asking for 3 times the amount of interest Bill Me later charged the plaintiff and anyone else who joins.  They claimed the interest rates could be as large as 40 to 100% APR.  Since they are not a chartered bank, they are not regulated by the government.  While the service can be a very good selling tool for merchants, I think this law suit is frivolous.  People are suing companies for unjust reasons.  In my opinion, if you are not ok with the percentages that they will charge you, then do not use their service.  Simply do not buy the products if you do not have the cash and live your life within your means.  It sounds like this person was doing exactly that and instead of taking responsibility for their own choices, they decided to pass the blame onto the company and try to get some money out of it.  This ultimately then affects the rest of us as law suits are very expensive.

This is a second part to my free shipping post.   There are many shipping strategies one can use for their business.  One such example would be a fixed amount like $7.95 regardless of order size or amount.  This would however encourage large orders, but that is a good thing!  As I mentioned in my other post, offer free shipping with a minimum purchase amount.  There are a few benefits to offering free shipping, such as larger order sizes, item prices could increase and per-order cost may decrease.  Downsides are your profit margin for the heavier items may be too low and the additional profit may not justify the increased shipping expense.  You would need run some “what-if” scenarios using each pricing method and see which one works best for your business.  Click on the image to the left for a download excel sheet you may download to help you figure this out.  Gotmerchant.com tailors to merchants of all types including Internet, retail and wireless credit card machines. However, this really only pertains to Internet merchants running an ecommerce store.

In today’s market place more and more consumers are expecting Internet merchants to offer free shipping.  If you currently do not, isn’t it time you consider doing so?  A recent report by an analyst showed that free shipping remains an important factoring in normal online sales.   What I found interesting was that the average order amount was higher for merchants that offered free shipping.  When an Internet store offers free shipping for purchases over $75 for example, it encourages consumers to spend more to receive the incentive.  People like to receive free stuff.  This encourages them to continue shopping to see if there is anything else they may like to buy.  Merchants do have a cost by absorbing the shipping cost, but if it were to increase your average sale amount, that would very well pay for it.  Plus, the extra bonus is you landed a customer that could very well come back many more times in the future.  Look at Amazon, their profit margins are very slim, but they have a ton of repeat customers.  Having larger sales does increase your merchant account fees, but then that is also something you must expect too.

This year may look very different for consumers in terms of big discounts.  Many large merchants are reporting that they plan on keeping their inventories low to cut operating costs.   It is different for each industry though.  For example, take the auto industry.  They are slowly seeing a 15% increase in auto sales.   The clothing store on the other hand, maybe one of the few markets that will still be heavily discounting to encourage consumers to keep shopping.  However, the discounts may not be as big as last year.  Deep discounts is a result of overstocking and big chain merchants should do a much better job this year controlling it.  The economy doesn’t seem to be dropping anymore, but it will definitely take time for consumers to feel confident enough to start spending big bucks again.  Business for us in the credit card processing industry took a big drop in December, but things seem to have picked back up after the new year.  This is the main reason for such a delay in posting a new topic.  We are seeing more merchants calling us that are interested in switching processors to save a little bit on their processing fees.

Mike from Allbusiness.com describes his recent experience in a REI store located in California.  It is a warm 80 degrees on a December day.  He went there looking for some clothing and the first thing he noticed is it was warm in the store.  This definitely did not encourage him to try on any clothing.   I think most business owners would agree, nothing turns a shopper away faster than an uncomfortable experience.  Society as a whole is becoming more picky on what they expect and will tolerate.   It doesn’t matter if you or your employees are comfortable, but your customers.   How can this apply to your business?  I personally go to a local gym here in Denton and at times, it feels like they try to save money by not keeping the place at a cool temperature.  I would think most fitness people would agree, that is one of the most important things for a gym.  Another area that can cause inconveniences for your customers is the speed in which you handle your credit card processing. For example, the speed it takes to process a credit card transaction can be critical for a fast food restaurant. Not so much for a sit down eatery, but is for many types of businesses. Also, older credit card machines process transactions slower than newer units. Such as the Verifone 3200 machine is awfully slow compared to a newer units introduced in the last five years.

It looks like 2009 has been a good holiday sales season for Internet merchants.  From Nov 1 to Dec 11, online stores received a total of 19.9 billion in sales, compared to 19.2 last year.  That is a 3% increase over last year during this tough economy.   According to ComScore, last week was the Internets best opportunity to get the last minute shoppers and receive their finale sales for the holiday season before shoppers direct their focus onto retail stores.  We still have some ways to go.  Compared to 2007, Internet merchants have seen several billion less than just two years ago. A 3% increase is great news for the credit card processing industry as well. That means our merchants have processed more compared to last year, which should result in a slight increase in our processing profit as well. I hope this is a sign of a positive 2010.