Improve your Credit Card Rates for Club Transactions

Can you really reduce the Rates & Risk factors recognized by your Merchant Account providers and Credit Card processors?

Note: This is not meant to define everything about the rates or risk factors. Hopefully it will help you to negotiate a better rate for your club purchases. Each business should investigate their own situation on a case by case basis and negotiate respectfully.

BACKGROUND: Different rates are applied to credit card purchases. The rates depend on many factors and change depending on how the sales transaction originates with your business as well as how you process the payment.

Most often Club Sales are recognized and dumped into the highest risk category but this does not have to be the case. The highest risk factor is defined as the customer not being in your store with a card in hand and personally signing the sales receipt. The high-risk transactions most commonly are those which come through the internet and represent a one-time purchase/ one-time customer.

What the processing companies fail to recognize is that Clubs Members are not one-time customers. They are repeat customers who are loyal and have ongoing relationships with the business. In actuality, the risks associated with club purchases are extremely low. So, how do you get this reflected on the rates you pay?

Let’s start by explaining some of the “risk” factors.

Lowest Risk #1: A person comes into your place of business, has the credit card in hand. The card is passed through the card reader and the customer personally signs for their purchase. The customer walks out with their purchase. This is rates as a very low risk transaction.

Low but Added Risk #2: The same person is in your place of business, has the credit card in hand. The card reader cannot read the card so the card must be hand-entered into the system. The customer personally signs for their purchase. Due to the hand-entered number, the calculated risk increases and usually so too do the rates.

Added Risk #3: The same person calls in the order by phone. The card reader must be hand-entered into the system. The customer does not personally sign for their purchase. The product is shipped to the recipient. The calculated risk has increased and usually so too have the rates.

Added Risk #4: These sales are most frequently internet sales but unfortunately this is also the category that most Club Sales fall into. Here is the scenario: The same person places their order through the internet. The card reader may hand-entered into the system or your shopping cart may be able to process the order. The customer does not personally sign for their purchase. The product is shipped to the recipient. The calculated risk has increased and so have the rates.

YES – In the case of Club Sales the customers are not in your store, with a card in hand and a personal signature on each receipt however, the Club Members have made an agreement with you for recurring billing. This is the key term which we have been advised to use when negotiating rates for Club Sales.

“RECURRING BILLING” is not the high-risk that quite often Club Sales get lumped into. Having your club sales categorized as recurring billing may help you reduce the rates that you pay to your processing and merchant providers thus increasing your profit margin (Yeah!).

True – some companies do not recognized recurring billing so this needs to be investigated with each provider.

Best of luck to you,

Theresa Dorr
Active Club Management
925-447-CLUB (2582)

www.activeclubmanagement.com
www.acmwineclubsoftware.com
www.wineclubsoftware.net