Payment processing isn’t simple for anyone. You need to find a service provider that will suit your company’s unique needs, but the application process is hardly easy. If you don’t have the credit or financial documents necessary for approval, you may have to seek out high-risk alternatives. This will only make your search longer and more difficult.
However, you’ll still encounter complications even if you’re approved. Accepting a deal involves carefully scrutinizing every aspect of the contract to weed out unfavourable terms. You can agree to a deal after this is finished, but you’ll still need to watch out for chargebacks, processing fees, and other problems that can hurt your business.
These risks are especially unfortunate for car dealers. The nature of their business makes any unplanned costs particularly damaging, so avoiding extra fees is particularly important.
This guide will help you understand the best practices for car dealership payment processing. With this information, you’ll be able to secure a more beneficial deal for your company.
High Processing Fees Can Kill Your Profits
Car dealerships don’t exactly rake in the profits. Sure, they sell big-ticket items that generate plenty of revenue, but between purchasing incentives from both dealers and manufacturers, it’s still difficult to break even. As The Globe and Mail reports, these businesses must generate over $1 million to earn back enough profit to buy one of their own new cars.
While it’s difficult for dealers to make a profit, it’s easy to lose it, especially when it comes to payment processing. Merchant service providers usually earn about one to two percent of a client’s sales volume, in addition to other fees (more on those shortly). That’s enough to wipe out a dealer’s profits on a new vehicle if the customer pays entirely on credit, which is why they usually only let shoppers pay half their balance with this method.
You need to negotiate for favourable rates and closely monitor your sales volume in each given month.
Beware of Hidden Fees
You can scrutinize your processing agreement until the cows come home, but hidden fees will probably appear on your bill. Service providers usually charge fees for administrative efforts, paper and other business costs. Unfortunately, it’s difficult to know how these will align with your processing rate. As a result, you may end up with a higher-than-expected bill, especially in your first month.
These charges will also severely clutter your statements. You may find it difficult to understand whether the fees are accurate as a result. If this happens, call your car dealership payment processing firm. It may be able to clarify the issue for you.
Chargebacks Are Especially Dangerous
When a client challenges a charge, credit card companies immediately withdraw the disputed amount from your merchant account. This can severely affect car dealerships. Their merchandise is so expensive that a wave of chargebacks may cause them to default on their accounts.
You need to seek some form of chargeback protection when you negotiate for your car dealership payment processing plan. This could potentially save you from financial ruin.
There’s a Better Way to Accept Payments
All-inclusive payment processing plans can help you avoid the problems outlined above. They offer you a fixed rate with no additional charges, so your bill will always be crystal clear. Best of all, you’ll receive fast batch delivery and up to $1,000 in protection from challenged charges. Car dealers can’t beat this value for their purchase.