How Seasonality Impacts Your Credit Card Processing Business

Jeff Fortney


In my last blog post I talked about seasonal merchants. If you saw my post, you learned three key things to keep in mind when targeting this group of merchants. Since then there has been much conversation regarding the specifics of seasonal merchants. I have received several questions and heard many stories, and I believe that their answers are very beneficial to share.

There are two types of seasonal merchants, basic seasonal merchants and short-term seasonal merchants.

A basic seasonal merchant is open a minimum of six months out of the year. Some may be open for up to nine months. Examples of basic seasonal merchants include golf courses in Michigan and ski resorts in Colorado.

A short-term seasonal merchant is one that is open less than six months out of the year. Examples include fireworks shops, Christmas tree lots, and other holiday-specific businesses.

The key difference is the six-month timeframe. Many authorization vendors and processors will place a merchant in a seasonal status for a maximum of six months. If they are closed longer they will close or delete the record. So, we just open a new account right?

Well, it's not that easy and could make for a lot of extra work for your credit card processing business. Yes, you will need a new account, but you will also likely need a new terminal ID and terminal download. Additionally, you may have to go through another credit approval. Has the ownership stayed the same since the account was closed? Has anything arisen that may preclude the merchant from being approved?

If the merchant uses a wireless terminal, which is very popular in the short-term seasonal marketplace, they may have to obtain a new SIM card as well. In other words, it will take more than a day to complete the set up in most cases.

That raises the second issue regarding short-term seasonal merchants. They tend to assume that they just need to call you a day before they open. Invariably, they open on a Saturday, which leaves you scrambling to get them set up and ready to go for their opening. As such, you will lose at least one to two days setting them up for only a month or two of processing.

Mobile credit card processing may be a good solution for these merchants, depending on the pricing plan. There are lots of options to choose from, each with a different combination of setup, monthly and transaction fees, as well as the length of the contract. However, if they are short-term seasonal they will likely find their records closed there as well. Unless they are willing to pay some sort of fee during the off season, they may have to start over.

In other words, a short-term seasonal merchant can and does have an impact on your time, and in some cases, that impact is quite significant on your credit card processing business. The time spent setting them up is time lost searching for and signing the non-seasonal merchant.

The basic seasonal merchant is much more stable. Their non-season is short enough that a phone call can get them ready to go for the season. There is no need for a new account or new download. There is no time commitment required to get them open and ready to go.

With a basic seasonal merchant, the only downside is the fact that there is no revenue earned during the off season. If the merchant's off season is short enough, the impact will be insignificant. However, with a short-term seasonal merchant, the cost of initial setup, as well as all subsequent set up costs, must be factored in to determine the merchant's value. You have to decide if the value they generate in the short time they are open offsets the costs.

When weighing the pros and cons of seasonal merchants, don't forget to consider whether they are basic or short term. If you do forget, you could find your short-term gain comes at a high cost.