By Jeffrey I. Shavitz
I've been reflecting on the COVID-19 pandemic from the perspective of a credit card processing executive. And like millions of others, my income and business has been dramatically compromised during the crisis.
The following stock prices illustrate volatility in the payments space:
Their earnings are severely affected by decreased spending—so are ours. Overall, portfolio valuations have dropped significantly. Some ISOs and agents I've spoken with are down as much as 75 percent. How do we move forward in this unprecedented business environment? We must educate our merchants, continue to diversify our portfolios and offer a suite of processing options.
Asset allocation and diversification are critical to a successful investment portfolio. This also applies to credit card processing: work with a variety of merchant types to ensure that you spread the reward and spread the risk.
The economic and human impacts of recent months have been devastating. But rather than live in the past, let's look forward. Let's set the foundation for the coming months and years by embracing the technological changes in payments and the cultural evolution of our society. This is the time to reset, plan, educate and build.
We've often contemplated a cashless society. This vision is now coming to fruition. Merchants of all types are encouraging shoppers to go contactless in an effort to keep their customers and employees safe. The fear of touching cash and transmitting the virus is real. It's critical to help merchants implement multiple forms of contactless payments.
Another processing option on the rise is the cash discount. In my hometown, my friends and I want to support our local restaurants and merchants and help pay for their processing fees. Buying bagels for $10 will now become $10.35 when paying with a credit card. I'm happy to pay the $0.35 fee to support my local bagel store—and so are an increasing number of other people. Consensus that it's appropriate to pass processing fees to consumers continues to grow.
Now is the time to educate CEOs, CFOs and independent business owners on many evolving aspects of credit card processing that will help them save money and satisfy their customers' desire for more technology-driven processing. Help them understand hidden processing fees, PCI, and how to combat phishing, set up an online portal if they don't have one, and set up mobile payments via smartphone, among other options.
Put yourself in the shoes of business owners who are contending with staggering unemployment, PPP loan documents, rent due while businesses are closed, employees and family members falling ill, people's spirits flagging under restricted contact, and more. And you want to sell credit card processing amid all of this? Yes. You won't be foolish if you call with empathy and endeavor to teach and help find ways to evolve the merchant's credit card processing.
Also, when adding a new merchant account, be respectful of the processor's underwriting process. Submit good, qualified deals that fit your designated processor's underwriting criteria. Many startups expect to be at interchange + 10 basis points when they're importing KN95 and N95 masks with one month future delivery, low credit scores of the principals, and websites with no refund policy. It won't happen, and it's unfair to waste personnel's time conducting due diligence for deals that won't be approved. Develop relationships with conventional and high-risk processing partners to handle all merchant types.
Dream of tomorrow. Credit card transactions are not going away. However, the payments industry will be transformed by new consumer behaviors and new merchant processing trends. Adapt, be respectful and aware of the new normal, and continue to educate, offer new opportunities and serve as a trusted resource for merchants. This is the only way to progress and create real value to ensure your success.
Jeff Shavitz is the CEO and founder of ToolBox Payment, a mobile app and processing company developed for the home services industry and XeroFees LLC, a cash discount company. Jeff is a serial entrepreneur in the payments industry having founded and sold three credit card processing companies including Charge Card Systems Inc., LexCharge and Alternative Merchant Processing. Contact him at email@example.com and 201-245-4545.
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