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Education

If a restaurant merchant has a price of 10 cents a transaction, Which sounds higher: 30 basis points or 0.25 percent?
the cost on 100 transactions is $10. If the merchant instead What does the merchant subjectively hear and perceive
has a price of 9 cents of authorization, the cost would be as lower? It's easy to understand the importance of
$13.50. The merchant perceives 9 cents, yet you make an perception and the need to understand each merchant's
extra $3.50. unique situation. The key to this rule is twofold:

Another example is the small-ticket merchant. Consider 1. The average ticket is the most important informa-
that the merchant has an average ticket of $15. Your floor tion you need to price a merchant.
price in general is 20 bps and 10 cents, and you decide
to quote this to your merchant. Your competition quotes 2. Ask questions with your merchant to help under-
no basis points and 15 cents. The merchant sees a pass stand how they perceive expense.
through plus a flat 15 cents, which (from looking at the
two offers) appears lower. Do you walk away? Be sure to spend time studying and applying rule 3; it has
potential to improve your sales practice immensely. Also,
Doing the math, you'll see you should have offered the do not address an issue if the issue hasn't been raised, and
flat plus 15 cents. Your floor of 20/10 generates 13 cents don't offer a better deal until a merchant asks for a better
per ticket. The perceived lower price of a flat 15 cents is deal.
actually 2 cents per ticket higher than your floor.
Remember, these rules provide basic guidance to help
You can also create a perception by choosing your words. protect your side of the partnership—and, in many cases,
When comparing your offering of 25 bps and 10 cents encourage you to say no. As always, I stand ready to
to a merchant's existing pricing of 30 bps and 10 cents, answer your questions. I have the perception that it could
choose these words: "I see you are priced at 30 basis points help ...
and 10 cents. I suggest we price you at 0.25 percent over Jeff Fortney is vice president ISO relations for Signature Payments. A
interchange and 10 cents. That is a quarter of one percent. long-time payments industry executive and mentor, Jeff is focused on
strengthening and developing partnerships and evaluating new busi-
ness opportunities. He can be reached at 214-458-1379.

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