Last week I was visiting with the owner of a small manufacturing company in Parsons.
I had shown him how to reduce his processing costs by sixteen percent, thus freeing up almost $60,000 a year to invest back into operations. His current rep had come down from Overland Park, and the last time they had spoken had been the day he signed the paperwork. His staff despised calling his current processor's customer service line; they said it was a mess of auto-messages, phone trees, and long hold times. Simply put, we were ready to do business together. All that remained was to verify that his contract with the other guys was expired, which he was confident had happened last June.
Well, it turns out he was right- sort of. And wrong- sort of. Nearly every processing company out there has a "rollover " provision in their contract- a fact that few processing reps even know about, much less inform their merchants of.
Say you sign a 3 year agreement with a $400 early termination penalty set to expire on May 1, 2012. Come May 1, you have a window, the length of which varies between processors, to notify the company in writing that you no longer wish to use their services. If the window is 30 days, when June 1 comes around and you haven't canceled, you are automatically rolled into another year's contract replete with the same early termination penalties you had in the first three years. Some companies roll you over once, some twice, and some roll their merchants until they cancel within the window or pay the penalty.
Dig out the fine print in your processing agreement, or have your company send you a copy. Find your rollover clause. Knowing how it works will save you some scratch should you ever desire to fire your credit card company.
Sunday, January 29, 2012
Monday, January 16, 2012
Is There a Merchant Revolt Brewing Against the Credit Card Companies? Part 1
As credit cards increasingly take the place of hard cash businesses find themselves increasingly at the mercy of the credit card companies. Accordingly, the card companies have more leverage over merchants than ever before. When the life or death of your business is dependent on keeping Visa happy, if Visa institutes 'Slap A Merchant Fridays' then on Friday you line up to get slapped.
That's been the case until recently, when their have been a couple of signs that businesses have had enough. One such business is a Park City, Utah restaurant called Cisero's.
Visa and MasterCard both claimed that Cisero's allowed fraudulent credit card charges and broke the card companies security rules by keeping information on too many card accounts in the restaurant's computers.
When a business owner signs the contract with a credit card processing company, almost all of the fine print in the contract deals with the relationship between the business, the processing company (the processing company is a middleman who's job is to move the money around between all the parties involved in a credit or debit transaction) and the banks. Your agreement with the credit card companies, known as an operating contract, usually arrives one to three weeks later in the form of a Processing Terms and Conditions, Funds Transfer Instructions and Association Rules. It is 30 dense pages of illegible fine print and is unreadable by anyone except for top notch contract attorneys.
This treatise, that a business owner either agrees to follow sight unseen by signing the processing contract or 'agrees by deed' when he processes his first credit card, is the source of grief for Cisero's. MasterCard and Visa used arcane provisions buried in the operating contract to fine the restaurant enormous sums of money and debit the funds from it's bank account with no warning, notice, or explanation. The credit card companies never proved their allegations nor gave the business an opportunity to answer the charges.
At first Visa said the amount of the 'actual fraud' was $1.26 million and Cisero's total liability was $1.33 million. The liability changed to $511, 513 when court papers were filed, and finally Visa said the restaurant owed $55,000. For their part, MasterCard said they could assess charges totaling $100,000 but was only imposing $15,000. They later added another $13,823 in 'loss claims'.
In Cisero's law suit against Visa and MasterCard it's lawyers point out that these shifting dollar amounts imply that the card companies were simply making the numbers up as they went along and contend that the whole mess is less about fraud than randomly taking money from small business owners that they don't expect to fight back:
"These various shifting numbers based on unexplained calculations” show that the “process is little more than a scheme to extract steep financial penalties from small merchants,” reads the suit.
The suit also brings up the operating contract:
"When the restaurant entered their first contract arcane operating rules- over 1000 pages in length- were not publicly available to merchants and didn't contain provisions on data security."
Observers expect the card companies to settle rather than to expose and try to explain their operating procedures in open court and possibly providing more ammunition to interested trial attorneys.
That's been the case until recently, when their have been a couple of signs that businesses have had enough. One such business is a Park City, Utah restaurant called Cisero's.
Visa and MasterCard both claimed that Cisero's allowed fraudulent credit card charges and broke the card companies security rules by keeping information on too many card accounts in the restaurant's computers.
When a business owner signs the contract with a credit card processing company, almost all of the fine print in the contract deals with the relationship between the business, the processing company (the processing company is a middleman who's job is to move the money around between all the parties involved in a credit or debit transaction) and the banks. Your agreement with the credit card companies, known as an operating contract, usually arrives one to three weeks later in the form of a Processing Terms and Conditions, Funds Transfer Instructions and Association Rules. It is 30 dense pages of illegible fine print and is unreadable by anyone except for top notch contract attorneys.
This treatise, that a business owner either agrees to follow sight unseen by signing the processing contract or 'agrees by deed' when he processes his first credit card, is the source of grief for Cisero's. MasterCard and Visa used arcane provisions buried in the operating contract to fine the restaurant enormous sums of money and debit the funds from it's bank account with no warning, notice, or explanation. The credit card companies never proved their allegations nor gave the business an opportunity to answer the charges.
At first Visa said the amount of the 'actual fraud' was $1.26 million and Cisero's total liability was $1.33 million. The liability changed to $511, 513 when court papers were filed, and finally Visa said the restaurant owed $55,000. For their part, MasterCard said they could assess charges totaling $100,000 but was only imposing $15,000. They later added another $13,823 in 'loss claims'.
In Cisero's law suit against Visa and MasterCard it's lawyers point out that these shifting dollar amounts imply that the card companies were simply making the numbers up as they went along and contend that the whole mess is less about fraud than randomly taking money from small business owners that they don't expect to fight back:
"These various shifting numbers based on unexplained calculations” show that the “process is little more than a scheme to extract steep financial penalties from small merchants,” reads the suit.
The suit also brings up the operating contract:
"When the restaurant entered their first contract arcane operating rules- over 1000 pages in length- were not publicly available to merchants and didn't contain provisions on data security."
Observers expect the card companies to settle rather than to expose and try to explain their operating procedures in open court and possibly providing more ammunition to interested trial attorneys.
Later in the week in Part 2 will be the story of a merchant based class action suit that caused MasterCard to cry 'Uncle".
Monday, January 2, 2012
You Can Keep Your Resolutions This Year.
It's January second. The tinkling noises you will hear over the next two to twelve weeks is the sound of 2012’s New Year's resolutions being broken all around you.
Year in and year out January is the month that gyms get the highest number of new members. Jenny Craig, Nutri-Systems and Weight Watchers all have their best months. AA and NA groups see more new faces in January than any other two months of the year combined, and on line book sellers deliver self-help books by the truckload.
And next year will be the same, because statistics tell us that by the end of March only three percent of the people who made resolutions will still be following them.
What makes us unable, year after year, to make the changes we know we need to make in our lives, for our health, for our families, for our careers? It's not what you think. It's not laziness, or complacency, or sloth. It's because making those changes is damn near impossible.
Scientist who study the brain don't agree on much, but one thing they all seem to line up on is that when we have done an activity or engaged in a behavior enough to hard wire it in our brain as a habit then it becomes incredibly hard to unwire. This was very useful back when our food hunted us while we hunted it and hesitation was the difference between eating supper and being supper. But in modern times it means that dropping twenty pounds so you'll have a shot when you ask out the hot redhead in the next cubicle it near impossibly hard.
Near impossible, but not impossible. Remember, three percent of the people that set New Year's resolutions are still living by them three months later. That begs the question- what is different about that three percent, what do they do differently than the vast majority? Studies have given us two answers.
The first is that the three per centers are goal setters who write their resolutions down and refer to them often. Many successful resolution setters tell of leaving Post-its with their goals on the bathroom mirror, on the refrigerator, on the TV screen. One man made his cell phone ringtone a recording of his resolution, to be reminded every time his phone rang. It is hard to settle back into the old habits when the new ones are staring you in the face wherever you go.
Secondly, the people in the three percent know that changing their own behavior is going to be an enormous undertaking. They approach it with the single-mindedness of a tired marathoner approaching a steep hill. One foot after the other, keep plodding, don't quit, don't stop, must not let up. No matter the difficulty or the pain, unflaggingly putting one foot in front of the other. Until finally the hill is crested, the old habit falls away, and a new one snaps in to take its place.
That's the sort of effort it takes to make changes in our brain's hard drive. Very few are willing to put forth that effort. But the ones that do find success.
If you made a New Year's resolution (and are serious about wanting to make the change), write it down so that it is always on the periphery of your thoughts. And start running your hill. Good luck- hope to see you on the downhill side
Monday, December 19, 2011
Will You Take My Money?
I told you last week that this week's post was going to relay a good customer service story, to offset the tale about Shmukdonald's. But something happened this afternoon that really hits a nerve with me.
The contact management system that I use underwent a major overhaul recently, and I despise the new system. (My aversion to change may be coming into play there. I don't know.) I checked out several systems, and found the one I thought would work best for me. I just had one small question. That's where things went awry.
I had emailed my question on three successive days to the salesperson who had replied to my initial inquiry, with nary a word back. Clearly, time for a phone call. I should have taken it as a warning that I had to search the company's site for 10 minutes before I found a phone number (a toll number) in very small print on an obscure 'other details' page.
Call one was answered by an auto-responder. I'm no Luddite, but I am a big enough believer in customer service that auto-responders always set my teeth on edge. I hit 'eight, for sales' as directed. Eleven rings later a happy-salesy voice thanked me for my call, assured me that everyone in sales was busy as a one- legged man in a butt- kicking contest, but if I would leave a message my call would be answered in the order it was received. I left a message that hit about a four on the one-to-ten grumpiness scale and also referred to the three unanswered voice mails.
Forty minutes later, call two. Hitting 'eight' again got the same voice mail message. I left no message of my own, called right back with call number three. This time I followed the responder’s admonition to hit 'four' for service. Ten rings got me 'Here in service we're even busier than those fools over in sales.' I was once again assured of the importance of my call, and promised a returned call in the order my call was received.
I didn't leave a message and immediately placed call four. At the sound of the auto-responder I hit 'zero', and waited happily for the sound of a human voice.
"You have reached the general mailbox. We apologize, but this mailbox is full. Please push....."
You gotta be kidding me. Calls four through eight were just me hitting random numbers- there had to be a human being somewhere. At this point I wouldn't do business with this company if they were selling quarters for a dime, but I was determined to hear a human voice before I went on to the next company.
Hitting the pound sign on call nine was promising- it sent me to the company directory. Unfortunately, no entry that I tried led to a valid extension. Not Smith, Jones, Miller, Baker, Tom, Steve, Angelique (my email tormentor from last week), Emily, Katie, Thomas, Thompson, Stewart or Wilson.
I gave up.
That ttok place over five hours ago. My voicemail, like last week's emails, remains unanswered. All I wanted was an answer to an easy question, and to give them my money.
I promise you- no company has ever gone broke from the cost of having a live, friendly person answer the phone in less than four rings.
There are customers out there trying to give you their money. Do you want it?
Tuesday, December 13, 2011
Two Tales of Customer Service, Part 1
So, I'm on the road a few days ago, with no time to stop for lunch. I pull into a large national burger chain- to protect their anonymity I'll call them Shmuckdonald's- and order a couple of burgers and a tea, for a total of $4.09.
About a week ago a very small hole formed in the magnetic strip on the back of my debit card, making it impossible for some credit card terminals to process my card. We are switching banks next week, so we decided not to order a new card, and the merchants whose terminals can't read the card just punch it in manually.
Not Shmuckdonald's.
I watched through the window as several different employees took turns furiously swiping my card. After everyone in the group had taken a whack at it a large man in a button down shirt appeared. He swiped the card a few times, and handed it back to the girl working the window.
"I'm sorry, but your card won't work," She explained.
"It works fine, you just have to enter it manually," I replied.
She closed the window, said something to Button down shirt, who simply shook his head. Back to me.
"Our system isn't set up to do that. Sorry. Do you have another way to pay?"
"No, I don't. I'm coming back through in two hours. I can get some cash from my wife and Pay you then."
She shuts the door, talks to button down (who at this point really should have gotten involved in the conversation. Who asks to run a tab at a burger chain? The fact that I was doing just that should have alerted button down that he was dealing with an oddball, and maybe it was time for him to get involved.
Nope. Button down shook his head a second time, and window girl comes back to say,
"Sorry. Since your card won't work you'll have to pay some other way."
"How can you guys not......never mind," not being the kind of guy that wails on the hired help, I drive off, with a bad taste in my mouth.
CUT TO- Me, at the next burger chain down the road, happily munching on a double cheeseburger.
First off, if its true that Shmuckdonald's POS system doesn't allow manual entry of debit cards, that is an epic fail on their part. How many times have you been in line at store and watched the clerk punch in the card details of a customer in front of you. And Shmuckdonald's has no method for people in that situation to be able to use their card?
But the real failure in my mind was committed by button down. Shmuckdonald's spends tens of millions of dollars every year to get me into their business. His owner spent around a million on the franchise. And he can't get creative enough to find a way to provide me a four dollar meal.
Say I don't come back to pay for it. He has a drawer or a pocket short four dollars. Instead, because I'm a customer that holds a grudge, I will avoid that particular Shmuckdonald's like the plague. And I have already told this story four times today- once to a leads group with 18 people in it. That telling evolved into a 15 minute topper exercise, with everyone relating their worst experience with Shmuckdonald's customer service.
Hire creative, empathetic people, and give them the authority to solve your customer's problems. Unless your ad budget is as large as Shmuckdonald's.
That's the bad. Part Two, the good, will come later in the week.
About a week ago a very small hole formed in the magnetic strip on the back of my debit card, making it impossible for some credit card terminals to process my card. We are switching banks next week, so we decided not to order a new card, and the merchants whose terminals can't read the card just punch it in manually.
Not Shmuckdonald's.
I watched through the window as several different employees took turns furiously swiping my card. After everyone in the group had taken a whack at it a large man in a button down shirt appeared. He swiped the card a few times, and handed it back to the girl working the window.
"I'm sorry, but your card won't work," She explained.
"It works fine, you just have to enter it manually," I replied.
She closed the window, said something to Button down shirt, who simply shook his head. Back to me.
"Our system isn't set up to do that. Sorry. Do you have another way to pay?"
"No, I don't. I'm coming back through in two hours. I can get some cash from my wife and Pay you then."
She shuts the door, talks to button down (who at this point really should have gotten involved in the conversation. Who asks to run a tab at a burger chain? The fact that I was doing just that should have alerted button down that he was dealing with an oddball, and maybe it was time for him to get involved.
Nope. Button down shook his head a second time, and window girl comes back to say,
"Sorry. Since your card won't work you'll have to pay some other way."
"How can you guys not......never mind," not being the kind of guy that wails on the hired help, I drive off, with a bad taste in my mouth.
CUT TO- Me, at the next burger chain down the road, happily munching on a double cheeseburger.
First off, if its true that Shmuckdonald's POS system doesn't allow manual entry of debit cards, that is an epic fail on their part. How many times have you been in line at store and watched the clerk punch in the card details of a customer in front of you. And Shmuckdonald's has no method for people in that situation to be able to use their card?
But the real failure in my mind was committed by button down. Shmuckdonald's spends tens of millions of dollars every year to get me into their business. His owner spent around a million on the franchise. And he can't get creative enough to find a way to provide me a four dollar meal.
Say I don't come back to pay for it. He has a drawer or a pocket short four dollars. Instead, because I'm a customer that holds a grudge, I will avoid that particular Shmuckdonald's like the plague. And I have already told this story four times today- once to a leads group with 18 people in it. That telling evolved into a 15 minute topper exercise, with everyone relating their worst experience with Shmuckdonald's customer service.
Hire creative, empathetic people, and give them the authority to solve your customer's problems. Unless your ad budget is as large as Shmuckdonald's.
That's the bad. Part Two, the good, will come later in the week.
Sunday, October 16, 2011
No More Quiet Tuesday's
If you run a retail business or a restaurant one of the frustrations is that part of the week, often Tuesday or Wednesday afternoon, when inevitably, week after week, business slows to a crawl and it costs you more to keep the lights on than you are bringing in sales.
But what if you could drive more traffic into your place during the slow times?
What if there was a way to reach out to the 500 customers who had signed up to receive text messages from you, your 300 Facebook fans, the 200 customers who follow you on Twitter, and the 150 customers who carry your loyalty cards? What if you could send them all the same message- one about the incredible deal you were running, but only for the next four hours? And what if you could get all that done in about one minute; or better yet, since you are always slow on Tuesday afternoons, you had pre-scheduled it, and your message went out to all those customers without you lifting a finger?
And what if you could do all that for less than the cost of a tiny 1x1 ad in your local paper (one that nobody is ever going to see anyway). And what if there were a way to set it up so your true cost is zero, zilch, de nada, nothing? And what if, just to get you see how well it works, the first two months are free, and there is no contract so you can quit anytime you like?
There are no what ifs- you can do all the above, and more, with SpotOn.
SpotOn is a powerful marketing hub for your business- a one stop dashboard to run all of your social and loyalty networks from. There is nothing like it- no other service runs your social media, mobile messaging, loyalty program, deals, and analytics. Usually you have to pay much more than what SpotOn costs just to get help with one of those programs.
"But I don't understand social media or mobile messaging," you say. No problem. SpotOn has a local representative to help you, they will teach you the ropes as they set up your account, and provide you with ongoing top notch support while you use the service.
"But I already have a Facebook page," you say. Yeah, I see that. You have 23 fans, and your last post was in May. SpotOn will show you how to drive traffic to your page; not just Facebook, but Twitter and Foursquare, too. A bagel company in California went from 180 Facebook fans to over 3000 in three months with SpotOn.
Bottom line- a group of guys way smarter than me are behind this, and they wouldn't let you use it for free for two months if they didn't know it works so well that after two months nobody stops using it.
There are very few true, no risk, what-have-you-go-to lose propositions out there these days. This is one. Drop me an email, or call 417-439-8785, and lets talk.
SpotOn- Click. Your customers are listening.
But what if you could drive more traffic into your place during the slow times?
What if there was a way to reach out to the 500 customers who had signed up to receive text messages from you, your 300 Facebook fans, the 200 customers who follow you on Twitter, and the 150 customers who carry your loyalty cards? What if you could send them all the same message- one about the incredible deal you were running, but only for the next four hours? And what if you could get all that done in about one minute; or better yet, since you are always slow on Tuesday afternoons, you had pre-scheduled it, and your message went out to all those customers without you lifting a finger?
And what if you could do all that for less than the cost of a tiny 1x1 ad in your local paper (one that nobody is ever going to see anyway). And what if there were a way to set it up so your true cost is zero, zilch, de nada, nothing? And what if, just to get you see how well it works, the first two months are free, and there is no contract so you can quit anytime you like?
There are no what ifs- you can do all the above, and more, with SpotOn.
SpotOn is a powerful marketing hub for your business- a one stop dashboard to run all of your social and loyalty networks from. There is nothing like it- no other service runs your social media, mobile messaging, loyalty program, deals, and analytics. Usually you have to pay much more than what SpotOn costs just to get help with one of those programs.
"But I don't understand social media or mobile messaging," you say. No problem. SpotOn has a local representative to help you, they will teach you the ropes as they set up your account, and provide you with ongoing top notch support while you use the service.
"But I already have a Facebook page," you say. Yeah, I see that. You have 23 fans, and your last post was in May. SpotOn will show you how to drive traffic to your page; not just Facebook, but Twitter and Foursquare, too. A bagel company in California went from 180 Facebook fans to over 3000 in three months with SpotOn.
Bottom line- a group of guys way smarter than me are behind this, and they wouldn't let you use it for free for two months if they didn't know it works so well that after two months nobody stops using it.
There are very few true, no risk, what-have-you-go-to lose propositions out there these days. This is one. Drop me an email, or call 417-439-8785, and lets talk.
SpotOn- Click. Your customers are listening.
Thursday, October 6, 2011
Why would you do that?
"I leased my credit card processor."
Why!!??!! Why would you do that?
"There's a guy here trying to get me to lease a credit card machine."
RUN!!!! RUN AS FAR AND AS FAST AS YOU CAN!!!
Let's talk about business math.
Credit card terminal A processes cards quickly and quietly, has a small footprint and an easy user interface. You can lease it for $49 a month for 36 months.
Credit card terminal B is the exact same piece of equipment, brand new out of the box. It's free, and if it stops working you can get an equally free one that looks just like it.
So- what's better for the merchant, $1746, or free? Seems like a no-brainer, but every day I see smart, successful business owners that chose the $1746 option.
Now let's take it a step further. What if I told you that with the $1746 option, about $1000 of that goes straight into the pocket of the salesman who sold the equipment? Because that's the case. Kind of makes your ears burn, doesn't it.
One step further- your 36 month lease is actually a never ending monthly payment. At lease end, you have to return the equipment- or you can keep it, as long as you keep chucking out your $49.00 every month. Now your $1700 is $2352, or $2940. For something you could have had for free!
There may be a valid business case for leasing a credit card machine, but I have never seen it. Yes, a merchant gets to claim the depreciation on her income taxes; but I don't think the depreciation allowance comes anywhere near seventeen hundred dollars. I've heard salesman that lease terminals use buzzwords like "allocation of equipment" and "end user serviceability ", but that is a salesman trying to fog an issue and put a grand in his pocket.
There are processing companies that will provide their merchants with free equipment- not many, but a few. You can purchase a brand new terminal outright for a few hundred dollars. You can buy them refurbished on the internet for less than a hundred dollars.
One final note, if you still think leasing a terminal makes since to you. Go online and Google Northern Leasing, and LFG, and Eagle Finance, and Pushpin Holdings. See if that is a road you would like to travel down.
If I were a merchant I would want to stay far away from it.
Why!!??!! Why would you do that?
"There's a guy here trying to get me to lease a credit card machine."
RUN!!!! RUN AS FAR AND AS FAST AS YOU CAN!!!
Let's talk about business math.
Credit card terminal A processes cards quickly and quietly, has a small footprint and an easy user interface. You can lease it for $49 a month for 36 months.
Credit card terminal B is the exact same piece of equipment, brand new out of the box. It's free, and if it stops working you can get an equally free one that looks just like it.
So- what's better for the merchant, $1746, or free? Seems like a no-brainer, but every day I see smart, successful business owners that chose the $1746 option.
Now let's take it a step further. What if I told you that with the $1746 option, about $1000 of that goes straight into the pocket of the salesman who sold the equipment? Because that's the case. Kind of makes your ears burn, doesn't it.
One step further- your 36 month lease is actually a never ending monthly payment. At lease end, you have to return the equipment- or you can keep it, as long as you keep chucking out your $49.00 every month. Now your $1700 is $2352, or $2940. For something you could have had for free!
There may be a valid business case for leasing a credit card machine, but I have never seen it. Yes, a merchant gets to claim the depreciation on her income taxes; but I don't think the depreciation allowance comes anywhere near seventeen hundred dollars. I've heard salesman that lease terminals use buzzwords like "allocation of equipment" and "end user serviceability ", but that is a salesman trying to fog an issue and put a grand in his pocket.
There are processing companies that will provide their merchants with free equipment- not many, but a few. You can purchase a brand new terminal outright for a few hundred dollars. You can buy them refurbished on the internet for less than a hundred dollars.
One final note, if you still think leasing a terminal makes since to you. Go online and Google Northern Leasing, and LFG, and Eagle Finance, and Pushpin Holdings. See if that is a road you would like to travel down.
If I were a merchant I would want to stay far away from it.
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