Recently, Phil Ricci, Clearent’s Vice President of Sales Operations, had the opportunity to sit down with James Shepherd from CCSalesPro on his merchant services podcast. They had a great chat about one of the industry’s hottest topics: cash discounting, non-cash adjustments and surcharging.
As Shepherd mentioned, the concept of passing on the cost of processing to the consumer can be daunting. Trying to educate a merchant about the benefits of these programs can be difficult, especially if both the merchant and the sales representative are relatively new to these concepts. It can still be tricky for those who have experience selling these programs because there is so much misinformation and fear in the marketplace, and many providers seem to perpetuate this.
How can merchants share their credit card processing fees with their customers?
Some of this confusion stems from the fact that there are three ways merchants can share their credit card processing costs with their customers.
- True Cash Discounting – A true cash discount is when a business offers a discount to customers who pay by cash, check or store-branded gift card, instead of with a credit or debit card.
- Non-Cash Adjustment – Implementing a non-cash adjustment is another way business owners can offer a discount off of their listed, stated and advertised prices. Customers who pay with credit and debit cards do not receive the discount and will notice a non-cash adjustment on their receipt.
- Surcharging – Surcharging is when a business owner applies a fee to a customer who pays by credit. It’s important to note that surcharging is prohibited in six states and requires business owners to follow a few additional steps so they are in compliance with the card brands.
What is it about these solutions that makes them such a tricky selling proposition?
Due to the competitiveness of the industry, different parties can send mixed messages to merchants about the legality and compliance of cash discounting, non-cash adjustments and surcharging. Ricci was quick to point out the opportunity that this presents, which is combating that fear and uncertainty and branding yourself as an educator, a leader and a resource.
Clearent has worked hard to build our brand around advocating for the merchant and their unique interests. When thinking about selling these solutions, you can effectively create a unified, reliable solution for merchants to engage with as well as build your personal relationship with them. By taking on the role of an expert, you become a trusted business partner and recurring resource, rather than a one-time interaction.
What does it mean to be an educator?
Don’t be afraid to pull back the curtain and show the wizard. Like in the classic movie, The Wizard of Oz, the wizard was this scary creature, until you pulled back the curtain. You should do the same thing with cash discounting, non-cash adjustments and surcharging.
Follow a consultative sales process and engage the merchant by discussing the full scope of the program. Show them how sharing their processing costs with their customers puts more money in their pocket so they can grow their business. We are firm believers in empowering small business owners so they can make the best decisions for their business – and their customers.
However, in your quest to grow your portfolio, be cautious that you don’t oversimplify solutions and accidentally patronize merchants. The payments industry is complicated and ever-changing, so it’s best to slow down and take your time with the business owner. Remember, knowledge is power, and your customers will appreciate you spending the extra time with them, and later with their staff when it comes time to train them on the program.
How do I focus on becoming an ongoing partner, instead of a commodity dealer?
Historically this strategy has not been the norm in our industry, but at Clearent, we’re proving that it really works and everybody wins. Don’t be afraid to jump into the specifics of an individual business and assure them that there are payment solutions that work well for them – and put more money back in their pocket. Make sure they’re in the know, not just on board. That way you can treat the illness instead of just focusing on the symptoms.
There’s a symptom of this confusion over cash discounting, non-cash adjustments and surcharging programs that is often overlooked and misunderstood. A lot of consumer complaints and merchant frustration come from the fact that many sales professionals sell too well and fail to educate.
A good rep needs to introduce the right kind of complexity into this system. Merchants deserve to benefit from a richer relationship with their sales representative, who wants to provide for them on multiple levels, rather than feeding them complexity and scare tactics. This helps not only with retention, but also with cross selling as you will begin to see your customers take advantage of additional products and services.
What’s on the horizon with these types of solutions?
These solutions aren’t going to go away anytime soon, according to Shepherd. It may be cash now, and probably debit tomorrow, but rather than viewing this as something to lament, it can be viewed as an opportunity. Our industry is really fluid, which means that at times, we can help control the narrative, get out ahead, and help our merchants navigate their options. Sales reps that come alongside us will have the tools and the shared vision to be a trusted, ongoing resource to their customers. Those are the relationships you want to keep.
To learn more about James Shepherd and his work at CCSalesPro, click here.
To learn more about how the Empower Program and how it can help you elevate your residuals up to 5X while helping your merchants thrive, click here.