Let’s face it, there’s a huge discrepancy in gift card sales among small retailers, big-box and online retailers; and quite possibly the secondary gift card (exchange) marketplace. As a small retailer, you are vastly underrepresented in the gift card space, seemingly, with no end to their plight in sight. According to a CEO Blog Nation article, “If every U.S. household spent $10 with a small retailer, the economic impact would exceed $9.3 Billion.” Trading out $10 cash for $25 in gift cards in this scenario propels the economic impact north of $23.25 Billion -- thereby putting small retailers in the mix of the $115 Billion gift card industry.
In today’s marketplace, strategic retailers are those best positioned to meet customers at every point of their value proposition to their business. This includes (but is not limited to) offering gift cards through their physical store’s point-of-sale interface with customers as well as via their websites and/ ecommerce stores. Doing so is the essential way retailers large and small already selling gift cards are multiplying their customer counts, leaving those retailers (large, small and everything in-between) in their dust -- and seizing those dollars they’re leaving on the table to their ledgers.
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More than ever before, America’s small retailers must maintain the freedom to partner with vendors providing the leading-edge technologies that keep their businesses competitive and operating efficiently. Just as paying for processing and point-of-sale equipment is a thing of the past, so is signing long-term contracts for merchants services. That’s the way it should be; however, it’s not always so as small merchants disproportionately are relegated to terms of three to five years for services far below what big-box and online retailers are enjoying. The net effect to such discrepancy is often poor service, high rates and non-existent innovation.
Terminating, in most cases, requires paying up to $500, which is burdensome for most small retailers. Further exacerbating the situation is the requirement that small retailers sign new merchant services agreements when taking on merchant cash advances. With many merchants already paying 50 basis points (.005) more on transaction processing based simply on being with the wrong service provider, the playing field is very uneven across the small retailer landscape. For example, assuming $20,000 in monthly credit card sales, reducing (card present) rates from 1.69% to 1.19% saves small retailers $100 per month or $1,200 annually.
The absence of a long-term contract for small retailers not only means their merchant services provider has to earn their business day in and day out, but more importantly that they won’t face stiff penalties when they have to pivot to remain competitive in the marketplace. In no way does this close the gap between how big and small retailers are treated in the marketplace, but it does provide much needed room to breath while plotting course to keep up.
In today’s competitive marketplace, there is no reason for small retailers to buy, lease, or rent credit card processing equipment of any kind. Why? Because, increasingly most merchant services providers offer card processing terminals free of charge to their customers -- and the best ones do so without re-routing equipment costs through the transaction fees small retailers pay on sales.
Not having to own, lease, or rent card processing equipment is a tremendous benefit at every stage of your business. First, by not having to buy your equipment, you are keeping much needed cash on hand for other purposes. And by not having to lease the equipment, you are avoiding getting stuck when equipment becomes obsolete, saving even more money and preserving your business credit for other purposes. Even more, using free terminals, enables you to save significantly on PCI compliance costs as the burden remains with the equipment owner and not the end user. So let’s recap...three surefire reasons small retailers shouldn’t pay for card processing equipment are as follows:
But first, you must choose the right service provider -- one that doesn’t require you to sign long-term contracts -- yet still maintains the flexibility and vision to provide best in class card processing equipment for small retailers across the U.S. and Canada.
Jeffery Lakes is founder of CardsCashRewards.com
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