By Jeff Fortney
The call came in July several years ago. The merchant was very upset. The first thing he said was, "Why did you raise my rate? You can't do that. I'll sue!"
After I identified the merchant, I confirmed what I had immediately suspected was the source of his frustration: his rates had gone up, but not in July; they'd gone up in May. And the increase was in direct response to the card companies' (which were formerly associations) increases in interchange.
I explained that the notice about the increase had been on his statement the month before it took effect and that all merchant agreements allow for adjustments when the card brands raise their rates. I then added, "We had a similar increase a year ago, too."
It was clear he hadn't noticed the announcement about that one either. He obviously didn't spend much time looking at his statements or the messages they contain.
It is increasingly evident that most merchants ignore statement messages, letters they receive and even emails.
This type of situation was not uncommon in the 1990s when card company rates changed every six months, and the changes were too large to absorb into discount rates. Processors would notify merchants 30 to 60 days in advance through merchant statements and then prepare for the onslaught of calls that would come three months after the adjustments.
Granted, the card brands are not making changes as often today, nor are the changes as significant as they once were. However, with the advent of glos IRS fees, Payment Card Industry Data Security Standard compliance fees and other specific items being added to merchants' processing-related costs, it's no wonder processors are receiving numerous calls from angry merchants.
However, identifying merchants' reasons for being upset does not negate the fact that an irate merchant is at risk of leaving. For every call you receive from an angry merchant, you can be sure 10 others are also upset but won't take the time to call - they'll just leave.
Unless you become aware of your merchants' dissatisfaction early on and take the appropriate, proactive steps, your portfolio will be in serious danger of shrinkage. Following are suggestion for preventive actions to take at three key times:
Along with training a merchant on use of the terminal, take the time to educate them on the statement. Show them what they will see by providing a sample statement. Explain each section and emphasize any area where messages may be posted.
After completing the training, close with something along the lines of, "Can I share one of my biggest fears? Sometime in the future, something will happen and an important notice will be posted on your statement. Somehow you will miss it and not realize the importance of it until I'ts too late. Do you think that could happen?"
The merchant may ask for examples of what could happen, and it's best to use past situations. Explain how many instances were one-time situations where a merchant had the opportunity to address the issue, but by not reading the message he or she lost the opportunity to take any necessary action.
Be sure to stress that in all cases if the merchant had read the message, questions could have been answered in advance, before there were any negative repercussions.
This will help reiterate the importance on reading the statement every month. Don't avoid this step because it feels like a negative. In almost every case, the merchant will appreciate the heads up, and you will gain added trust.
Some may ask what the change entails. Explain any change in layman's terms, and be prepared to discuss the key details. Don't read the message verbatim, as that can be confusing. Remember, you are their trusted adviser, so act like one. Tell them the facts and how the change will affect them. Be proactive. Call your merchants rather than wait for them to translate the statement message and call you, possibly in confusion and anger.
In at least one communication a year, emphasize the importance of statements and any messages they contain. Remind your merchants that these messages could have a monetary impact and should be read each month.
Even if you convey the importance of messages in multiple ways and at all opportune times, there is no guarantee all your merchant customers will pay attention.
However, you will see the number who ignore your messages start to shrink, which means merchant dissatisfaction will have less impact on your portfolio.
Also, when merchants call, be sure to casually remind them of the number of times you have suggested they read messages and notices. This is critical even if reminding them brings up your fear of losing their business.
Jeff Fortney is Director of Business Development with Clearent LLC. He has more than 12 years' experience in the payments industry. Contact him at email@example.com or 972-618-7340.
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