The days of cash’s dominance are long gone. Nowadays, credit cards are the new normal. Businesses that don’t accommodate these methods will quickly find that they’re missing out on sales. With nothing to lose and everything to gain, they’ll seek out merchant services so they can take advantage of their shoppers’ preferred way of buying.
Unfortunately, car dealers aren’t so lucky in this area. The nature of their business leaves them stuck between a rock and a hard place. The expense of their merchandise ensures that customers will want to pay with credit cards, but it also presents severe problems that can damage a company’s bottom line and even its long-term financial viability. That’s why dealers need to look before they leap into a new processing deal.
This post will help readers do just that. It outlines a few of the best practices they can follow to ensure that they get the best processing deal possible. Read on to find out how you can find car dealership merchant services that match your needs.
You Need a Low Rate to Preserve Your Profits
Fun fact: Car dealerships don’t make as much money off their merchandise as you may think. In fact, for every new $30,000 car they sell, these businesses can make as little as $1,000 in profit. That’s rather low for enterprises that deal exclusively in big-ticket products. As a result, dealerships are especially prone to threats on their bottom line.
High transaction rates constitute one such danger. Payment processing companies don’t demand a flat fee for their services. Instead, they charge a percentage of the total sales volume a company accepts in a given month. If a dealership sells $500,000 worth of merchandise in a given month and its rate is 1.75 percent, it has to pay $8,750 in processing charges.
This may not sound like a lot, but it’s quite a dangerous amount to car dealers. These businesspeople stand to lose as much as half their profits if they allow too many credit card transactions. That’s why it’s important for them to find the right car dealership merchant services provider if they want to succeed. These organizations also need to limit the frequency of their transactions to keep costs down.
Penalties and Hidden Fees Can Create Unexpected Costs
Businesses need to watch their expenses when profit margins are slim. Too many small costs can add up and leave a significant dent in a company’s budget. This same principle applies to car dealership merchant services. Processing fees are bad enough, but they only represent the tip of the iceberg. Service providers can charge dealers so many times that they could completely clutter their customers’ monthly statements completely.
As with processing rates, there are ways to reduce these costs, but it’s very difficult to fully eliminate them. Things like administrative fees, paper costs and other charges can make budgeting a real problem for most firms. Thankfully, you don’t have to suffer through them…
There’s a Better Way…
An all-inclusive pricing plan can help you avoid the pitfalls of merchant services. You’ll only have to pay a standard processing rate and nothing more. Unnecessary fees, confusing statements, and blown budgets will all become a thing of the past. Instead, you’ll gain greater clarity on your monthly statements and a more assured sense of value from your processing plan.