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Education

Did you know your rates went up?

New rules of engagement
Today, the most common merchant pricing is interchange
plus. Changes we've seen have normally applied to
monthly expenses or small transactional increases.
Merchants typically review their statements (when they
review them) by determining the effective rate, and the
changes in the recent past have had minimal effect on the
effective rate.

With the elimination of the Electronic Interchange
Reimbursement Fee and standard, and the creation of the
new non-qualified category, effective rates can potentially
spike as much as 0.85 percent. Yes, March and April are
retention months again. But unlike in years past, the rules
of engagement have changed.

You have to communicate the changes before they happen
in a fashion that leads merchants to listen to you first. You
must have a conversation. In the old days, conversations
By Jeff Fortney were done face to face or by phone, email, and later texting.
TouchSuite LLC Today, I would guess the favored communication line for
most merchants would be text followed by email. However,
hen I started in the payments world, March in both of those cases, the tone can't be controlled. The
and September were known as merchant message can be misunderstood – and not in a good way.
retention months. The reason was all to
W do with interchange. In February, the card Two realistic options
brands would announce their interchange adjustments
(which were normally increases in some fashion) for April There are really two options: the telephone or face to face.
release. The same would occur in August for October Before deciding on what is the best option, begin by rating
release. your merchant base by profit, with the most profitable at
the top and the least at the bottom. Notice I didn't say by
In those days, the most common pricing model was tiered size. Rate them by the most important matrix: profit.
or discount. As such, an increase in interchange required
an increase in tiered levels. In other words, the merchant's Identify your top merchants. The number is your call;
rates would increase. It was also common for some it could be 10 or even 20. Just know that whoever you
companies to add a little to the rate to increase profits. identify as your top merchant requires a face-to-face visit
(or an alternative such as a Zoom meeting when social
The ISOs back then saw these increases as a blessing and distancing mandates due to COVID-19 are in place).
a curse. May was seen as a great selling month for new
merchants. Merchant level salespeople (MLSs) would Next, Identify those at the lowest level. These are the
"encourage" prospects to review their statements, as there merchants who don't generate revenue above your
were likely price increases. They would then wonder minimum return (yes, you should have a minimum return
aloud why the merchants weren't informed. As a result, level). These are the merchants that – if you have time –
more merchants were willing to listen to their sales pitch. you will call.

To the MLSs, that was a blessing. The curse was that, The remaining group need either a phone call or, if
while they were selling to new merchants, their merchants social distancing mandates are lifted, a visit. The criteria
were being sold to by other agents. To avoid this, it was that will determine whether you call or visit is yours to
imperative that they advise their merchant base of what decide. For example, if the merchant is located near one
was upcoming, and why. Thus, merchant retention month of your top merchants, a visit may be warranted – as well
was born. as convenient. Or if the merchant is a long-time merchant
who sends you business, a visit may be wise.

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