A car dealership is not an easy business to run. Many people mistakenly assume that since cars are high-priced merchandise, dealerships must just rake in the money. With slim profit margins and squeezes from manufacturers to offer ever-better pricing incentives to consumers, the reality is much less rosy.
The sale of a $30,000 car only nets around $1,000 to $2,000 in profit.It has been estimated that dealerships have to sell as much as $1 million in merchandise to make enough profit to purchase a single car on their own lots.
That’s why car dealerships need secure and affordable payment processing from their merchant services providers. Follow these quick tips to help get the best car dealership payment processing for your business.
6. Sniff out Hidden Fees
Before you sign with any payment processing provider, you should go through the contract with a fine-toothed comb to turn up any hidden fees that could cost your dealership extra. Many providers will try to pad their earnings through sneaky fees buried in the terms of your contract. Make sure your money stays in your pocket.
5. Avoid Paying Penalties
While you review the terms of your contract, be sure that you understand any penalties the provider could charge you. Then, actively work to avoid those situations. One easy penalty to avoid is a contract termination penalty—make sure you sign up with the right provider by doing your research beforehand, and you’ll never need to terminate your services and pay hefty penalties before a contract’s expiry date.
4. Declutter Your Bill
Is your payment provider sending you bills that make your eyes cross? This is another way providers try to slide additional fees past you without your knowledge. The more they cram onto your bill, the more likely you are to miss something—or to simply rubber stamp the invoice for payment. Ask your provider about additional fees. If you’re still searching for a provider, ask to see an example of a bill so you can know what you’re looking at beforehand.
3. Protect against Chargebacks
Another situation in which car dealership payment processing can be punishing is when chargebacks occur. When a customer disputes a charge, their credit card company will immediately withdraw the funds from your account.
That can spell big trouble in an industry where profit margins are already so slim; in fact, some dealerships default on their merchant accounts because of chargebacks. Ask what kind of protection your provider offers you when a chargeback does occur.
2. Negotiate Better Rates
It might seem like a pipe dream, but you can find better processing fees. Car dealership payment processing is subject to the same transaction fees as any other business, but the fee structure can affect how profitable your dealership actually is. Don’t be afraid to ask your provider for a better deal—or shop around to find the provider offering the best rate for your business.
1. Expect the Best
Car dealership payment processing can be a tough pill to swallow. The industry is subject to the same fees as anyone else, and you may even be considered a high-risk merchant, which means getting an account can be difficult. You may feel like you can’t ask your provider for more.
But you can—and you should expect so much more. Ask about all-inclusive plans that will provide you with the best of everything: protection against chargebacks, no hidden fees, decluttered statements, and more favorable rates for your car dealership. And if your current provider does not offer an all-inclusive plan, it might be time to shop around.