4 Major Reasons That Hinder Growth Of Merchant Services Program!

Did you know that certain reasons restrict a merchant services program from expanding? If you don’t, take out a few minutes and roll your eyes over the four major reasons behind declining or stagnant merchant services programs.

1. Low Merchant Retention —

70% is the annual merchant retention of the industry on average. Having said that, if there are a total of 300 merchants on the portfolio on the first day of the year, there would be only 210 merchants in the portfolio on the last day of the year. This clears that more than 7 new merchants have to be signed up every month to ensure the portfolio remains flat.

As keeping a present customer is way easy than finding a new one, it is great to use every strategy possible to increase the retention percentage beyond the industry average. For this, nothing could be better than adding a personal touch by assuring that the bank staff is always at the service of the merchant. This means associating with a processor that understands the philosophy of the bank and gives top priority to customer support. Doing so will increase customer retention to 90% or even more. At this much retention, only 2 to 3 new merchants have to be signed up every month to keep the portfolio flat. Believe it or not but this makes an incredible impact.

2. Out-of-Place Growth Strategies —

A number of things are available to be implemented to result in growth in merchant services programs. Some of these things are:

• Training the bank employees
• Having lead-generation incentive programs for all the bank employees
• ACH mining of the customers to find out the top prospects
• Discussions with new business accounts
• Marketing campaigns to valuable merchants

3. Lack of Support from Existing Processor’s End —

If support from the processor is not equivalent to the bank’s standard, bank employees don’t send new referrals. This is because bank employees do not refer their loyal bank customers when processors are not cooperative, as this may put their relationship with the customers at stake. For these important reasons, it is important to ensure that the processing partner follows the same culture as well as values as the bank.
While going through the due diligence process with merchant services providers, one good way is calling the help desk numbers from their website to know how the way customers are treated. Important questions to ask from the valuable processors are:

• What is their annual customer retention rate?
• What metrics do they track to boost customer retention?

4. Lack of Focus on Merchant Services —

Merchant services have emerged as an afterthought to bank employees and are only taken into account when information is requested by a customer. Never ever are merchant services provided proactively. This can be settled by having a stable upper management that emphasizes the value of merchant services.

When merchant services goals are put in place for officers & branches and merchant services are rolled up to one individual who holds ownership for portfolio growth, tremendous success is assured. It is this person only who is responsible and concentrates on the expansion of the portfolio.

10 frequently asked questions (FAQs) about a typical Merchant Services Program:

1. What is a Merchant Services Program?

• A Merchant Services Program is a suite of financial services designed to help businesses accept and process electronic payments, such as credit and debit card transactions.

2. What services are typically included in a Merchant Services Program?

• Typically, a Merchant Services Program includes services like credit card processing, debit card processing, point-of-sale (POS) systems, online payment gateways, and sometimes additional features like gift card programs or loyalty programs.

3. How does credit card processing work within a Merchant Services Program?

• Credit card processing involves the authorization, capture, and settlement of credit card transactions. When a customer pays with a credit card, the merchant’s payment processor communicates with the card network and the customer’s bank to verify the transaction and transfer funds to the merchant’s account.

4. What are the fees associated with a Merchant Services Program?

• Fees can vary but typically include interchange fees (set by card networks like Visa and Mastercard), assessment fees (also charged by the card networks), and markup fees from the merchant service provider. Other potential fees may include monthly fees, statement fees, and chargeback fees.

5. How long does it take to set up a Merchant Services Program?

• Setup times can vary depending on the provider and the complexity of the business’s needs. However, it typically takes anywhere from a few days to a couple of weeks to set up a Merchant Services Program, including the installation of POS systems or online payment gateways.

6. What types of businesses can benefit from a Merchant Services Program?

• Virtually any business that accepts electronic payments can benefit from a Merchant Services Program. This includes retail stores, restaurants, e-commerce businesses, service providers, and more.

7. Is it necessary to have a physical storefront to use a Merchant Services Program?

• No, many Merchant Services Programs offer solutions for online businesses and service providers who do not have physical storefronts. These solutions often include online payment gateways and virtual terminals.

8. How does security work within a Merchant Services Program?

• Security is a crucial aspect of Merchant Services, especially concerning the handling of sensitive payment information. Most programs comply with Payment Card Industry Data Security Standard (PCI DSS) requirements and implement encryption and tokenization to protect cardholder data.

9. Can a Merchant Services Program help with international transactions?

• Yes, many Merchant Services Programs offer support for international transactions, including the ability to accept multiple currencies and payment methods commonly used in other countries.

10. What kind of customer support is available with a Merchant Services Program?

• Customer support offerings vary between providers, but many offer 24/7 support for technical issues, account inquiries, and assistance with chargebacks or disputes. Some providers may also offer dedicated account managers for larger businesses.