Credit Card Processing Swiping Your Sanity?
Davis
When was the last time you thought about your credit card processing system?
If you're typical, you probably haven't thought about it at all. In fact, you probably avoid thinking about it because you know that you're getting charged incredibly high fees to process each of your transactions.
Just ask Joe Santa Maria, general manager of Worcester Fitness. One mention of credit card fees and he'll launch a tirade that sounds something like this:
“You (as the business owner) did all the work,” he told me during a recent telephone interview. “You opened the business, took out the second mortgage to pay for it, hired the person to swipe the credit card, but someone else collects all these fees. It's an insane process.”
That frustration came to a head last year around October, when Santa Maria reviewed his monthly statements from his credit card service company and struck upon an important realization.
“I figured out that the amount of money we were spending just to get our money was enormous,” he said. “It was so enormous it made me feel like we had lost a giant account. It was enough to make me think there's got to be a better way than this.”
Finding Alternatives
So, Santa Maria started doing research and called his bank, People's United. A business services officer there was able to help him navigate the confusing waters of credit card processing, including the associated fees and security issues. He found a new vendor to handle all the club's credit card processing.
The vendor, MindBody, is a system tailored for fitness centers and is going to mean big changes at the club as it launches this week. Worcester Fitness now has a pretty limited online system that uses PayPal for people to purchase memberships. They also have the old-fashioned card-swipe machines on site. With MindBody, they'll have an integrated web and in-person credit-card system that doesn't run off of big, bulky cash registers, but off iPads. Now, employees at Worcester Fitness can walk through the club and help customers purchase items on the go. No more paper receipts, unless the customer wants it. Records are kept online, and customers can ask for their receipts to be emailed.
Like Worcester Fitness, countless businesses in the region are crunching the numbers and realizing the status quo just isn't working.
Old vs. New
Keith Reardon, co-owner of Commonwealth Consulting Group in Worcester, built a business with his partner, Brian Pelczarski, around helping businesses do the same analysis Santa Maria did. The travesty, according to Reardon, is that too many businesses are throwing money out the window because they're using antiquated credit card processing systems.
“They can get lower rates by processing cards in a more sophisticated way,” he said. His firm typically sits down with businesses and reviews their credit card systems in detail and can often find very basic ways to save the company money. One area in which are lot of business-to-business firms are wasting money is by having old-fashioned swipe terminals when the majority of the credit card processing that they're doing is from over-the-phone orders.
“When a business-to-business firm is punching credit card numbers into a black box, they're overpaying on their credit card fees,” Pelczarski said.
One local business owner who's been using an iPad to process credit cards for years is Amy Chase at Crompton Collective, an antique store/artisan mall in Worcester's Canal District. In fact, she's been using it for so long that she was actually a beta tester for the service when it launched.
“With two mobile shops, I need something that I can swipe on the go,” she said.
Chase works with a vendor called Square (Squareup.com), which gives you the swiping attachment for your smartphone or tablet computer for free. When a customer wants to pay with a credit card, you just swipe the card on your mobile device and have them sign directly on the screen with their finger. No pens to run out of ink. No paper. It's just easy. Square then collects either 2.75 percent of your credit card sales that are processed through their device, or a flat fee of $275. If you process more than $10,000 per month, you'll want to go with the flat fee because it's cheaper.
Square doesn't divulge how many businesses are using its services, but a spokesman for the San Francisco-based company, KC Simon, says they number in the millions. And Square has released a steady stream of new products, including the Square Stand, which basically turns your tablet into a cash register. (It costs $299.)
In the end, the key thing to remember is that there are options when it comes to credit card processing. If you haven't taken a look at how your business is handling these transactions, now's probably the time.
Christina Davis can be reached at cdavis@wbjournal.com.
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