In today’s shrinking economy, with your small business members feeling the effects of declining consumer spending, one thing keeping processing volumes from bottoming out is the electronification of payments.
Integrating payment services, such as card acceptance (merchant processing) and business credit and debit cards, into your business services is critical to maintaining a strong relationship with your small business members. For every service your credit union does not offer, your business member will look elsewhere – to another financial services organization, most likely a bank.
Card acceptance services are an integral part of many businesses, as electronic payment options increase customer spending, improve cash flow and enhance accounting controls for point-of-sale payments. Even some businesses you may not think of as traditional card acceptors, those with government contracts for example, now accept electronic payments.
Most financial institutions outsource their merchant processing services, but outsourcing does not have to mean losing the all-important direct relationship with business members. Even in an outsourced model, your member representatives, commercial lenders or tellers can communicate with members about the service. In fact, the ability to educate and train branch staff about these services is an essential vendor offering that should not be overlooked when considering outsource options. Ideally, credit union staff should be comfortable and knowledgeable about merchant processing and other card services in order to field questions and introduce or sell related small business services.
Stay competitive and save money
Outsourcing card services enables your credit union to be competitive in offering these services - without the hassle or risk of managing the program. It also generates a monthly fee income stream for the credit union. The fee income stream is generally based on how many businesses you refer that are signed up, along with card acceptance sales volume generated by the business. Be wary of alternative fee income opportunities that are based on risky or fiscally unhealthy products, for example products like cash advance, future bank sales or products where you make a margin on currency transactions.
Choose a partner who is up-front about their fees, and one who does not base their core revenue on selling equipment or leases. While it may sound enticing to be charged “only $50 a month” for point-of-sale equipment, if that monthly charge is based on years of service, you may be paying thousands of dollars for equipment with an up-front value of less than $600.
Choose a partner who is flexible in how you manage the business relationship. Your credit union may want to be the 'face' of the program and perform the initial sale and some limited relationship management. Others may choose to refer the business to your partner vendor. A flexible vendor will work with you to manage the merchant processing relationship, either way, to match your approach and culture.
As many credit unions are aware, small businesses like to consolidate their banking relationships with one financial institution, to reduce the number of vendors who need to be vetted. Vetting 15 or 20 different business service vendors is both time consuming and inefficient. And just as your business member enjoys having a "one stop shop" credit union relationship, think about choosing a partner vendor who can offer both merchant processing and business credit and debit cards, making your vendor management process that much easier.
Since 1981, the principal focus of Primax has been to strengthen the customer relations and profitability of its clients with customizable, high-quality card-processing programs, products and services. Primax provides payment card (credit, debit, and gift) services to more than 140 community financial institutions throughout the U.S. and the Caribbean and provides numerous options for owning or outsourcing the back-office functions of credit unions’ merchant and/or card programs.
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