By Austin Mac Nab
VizyPay
The used car market has been revving up the past few years. In fact, Dimension Market Research estimates the used car market to reach a whopping $1.8 trillion by 2024, largely driven by online sales platforms and the need for certified preowned vehicles (see bit.ly/3Be9K5D).
However, when it comes to payment processing, many dealerships face a substantial speed bump. From extended transaction times to the ever-increasing security vulnerabilities that exist, these points of disruption can negatively impact dealerships and daily operations. If left unaddressed, it will impact the dealership's bottom line.
Dealerships have a unique challenge when it comes to payment processing due to the high-value transactions that go way beyond a typical retail experience. Thus they are often hampered by long processing times, fraud and high interchange fees. With big-ticket items like vehicles, dealerships must present multiple payment options, like in-house financing, bank loans and third-party lenders.
Unfortunately, as many know, the transaction process at a dealership is not a short one. As the process goes on, customers' patience can be short-lived. Slow payment processing does not just lead to inconvenience and dissatisfaction, it can also result in a potential loss of sales due to customer frustrations.
Beyond the risk of losing sales, dealerships are also fighting off cybersecurity vulnerabilities, one of the largest threats impacting businesses. In 2023, it was estimated that 60 percent of credit card holders experienced some sort of fraud (see bit.ly/3OSNyRq).
Dealerships handle a wealth of sensitive customer information such as credit card details and personal information, which, if compromised, can lead to the crisis of identity theft and financial loss for the customer. It's scary to think that a single data breach can result in reputational and financial repercussions that can take years to recover.
If slow transactions and cybersecurity vulnerabilities are not enough, dealerships are also hit with credit card interchange fees. These fees are charged by credit card companies at each transaction and can be as much as 3 percent; however, this fee quickly adds up over time. This can take a serious bite into the profit margin for dealerships, which can impact their ability to stay ahead in the highly competitive auto dealership market.
Dealerships must understand how much they are spending on interchange fees, as they are typically hidden in the monthly statements and often overlooked. Highlighting these fees can allow dealerships to understand where they have been overpaying and whether alternative solutions exist to minimize or all together eliminate the charges.
It is no secret that running a dealership is an expensive endeavor with net profit margins between 1 percent and 2 percent (see bit.ly/3ZPlq8n). This is substantially low as dealerships face the reality of having to make operational changes. A comprehensive payment processing solution with a system that is designed to meet the needs of used car dealerships can help dealerships stay competitive.
As the world digitally migrates each year, dealerships need to follow suit in their payment solutions. Streamlining the transaction process not only reduces the burden on dealership operations but also drops pesky wait times, which should directly improve customer retention and satisfaction.
Additionally, payment solutions need to prioritize security and the data of customers. Comprehensive security features such as fraud detection, encryption and adhering to the Payment Card Industry data, device and network security standards (PCI), which ensure security requirements for credit card processing, physical stores and payment data meet strict standards and regulation compliance.
Lastly, payment processors need to make a concerted effort to ensure dealerships have access to programs to reduce and/or wipe sneaky interchange fees entirely from their bottom line. The payment processor can make provisions such as cash discount programs that isolate the processing fee and shift the processing costs away by offering incentivized discounts to customers paying by cash or debit.
Flat rate pricing can also level the playing field by eliminating the complexities associated with interchange fees by applying a fixed fee on each transaction regardless of the transaction method or card type.
Dealerships can say goodbye to uncertainty due to fluctuating fees and focus on what really matters – growing their business and improving the customer experience.
The care and maintenance dealerships provide to vehicles needs to be given to their business operations, too. Dealerships can make progress toward operational excellence by choosing a secure, efficient and reliable payment processing system that, at the end of the day, will supercharge the customer experience and play a role in achieving long-term financial success. 
Austin Mac Nab is CEO and founder of VizyPay, a Waukee, Iowa-based provider of payment technology solutions for rural small businesses across the United States. With over 20 years of experience, Mac Nab is an expert in the payment processing, bank card and retail industries. In 2017, Mac Nab launched VizyPay with the goal of disrupting the status quo of the payments space to help rural small businesses level up their operations and save money on processing fees. Under Mac Nab's leadership, VizyPay was listed on Forbes FinTech 50 and is the #2 fastest growing company in Iowa with 100+ staff and thousands of customers. In 2022, Mac Nab was awarded the Electronic Transaction Association's Forty Under 40 Award for shaping the future of payments and named Technology Association of Iowa's CEO of the Year for his role in supercharging Iowa's tech scene and promoting access to payments technology among rural small businesses. Contact him via LinkedIn at www.linkedin.com/in/macnab07.
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