Merchant Processing Like Carnival Games

Navigating the Merchant Processing landscape is a little like playing a carnival game.

When playing carnival games, you know everything is rigged and confusing on purpose. But you play anyway. You also know they’re going to take your money, but the key is to play games that have the least amount of risk. (Be sure to stay away from the ring toss table.)

Merchant Processing Like Carnival Games

The same rules apply when you’re looking for merchant processing, but the stakes are much higher.  Instead of losing a couple of bucks you could be losing thousands.

Merchant Processing is a necessary evil for every golf course, and we know from experience that it’s not easily navigated. So here are a few tips that we’ve learned along the way that may help you. 

Work with a GMS (Golf Management Software) provider that is credit card agnostic.

This is America, and we believe in a free market. Don’t allow yourself to be forced to work with one specific processor. If they only have 1-2 companies that they can work with, run the other way because that relationship is rarely going to end in your favor.

Find the GMS provider that can work with the most Merchant Providers so you can let them all fight over your business and get you the lowest rates. (We work with 11 different processors.)

Know if your GMS Provider is making money off your Merchant Processing Fees.

This one is usually pretty eye-opening to most golf courses. Your GMS Provider is probably getting a percentage of your Merchant Processing fees. If you don’t know… ask them. I’d even go as far as having them sign something stating that they’re not profiting from your merchant processing fees. 

(We offer to sign a certificate of guarantee that we don’t make a dime off your merchant fees. We won’t coerce you into anything because we purposely stay out of that space.) 

The lowest rates aren’t always your best deal.

I know this seems counterintuitive but working with the Merchant Processor who has the lowest rates at first are doing this to get your business. Often, they will be inching those rates up in a few months.  Asking for a 3-5 year rate lock is a great way to make sure this doesn’t happen.

To compare apples to apples, use Interchange + pricing.

The interchange rate is a fixed rate (usually between 1.43% and 1.51%) that you pay to issuing banks and Visa/Mastercard. This is a fixed rate and is non-negotiable. The “+” is the markup or spread that the Merchant Processor gets as operating income for their services. This is the difference you pay from one processor to another.

There is usually a “Per Transaction Fee”

Only once in the last five years have I seen a Merchant Processor drop this fee and that was because the golf course they were bidding on did over $2,000,000 in credit card volume. This is a fee the processors charge on every transaction to help guarantee they will make a profit on every transaction. It adds up quickly when you’re doing over 10,000 transactions a year. So keep an eye on this fee as well.

Always know your effective rate.

This is a great and easy way to keep an eye on things. To figure your effective rate, divide your total fees/your total processing volume. If the number is higher than 2.5%, then it’s time to shop for better rates. Knowing your effective rate every month is also an excellent way to see if you are starting to see some increase in your processing rates.

Don’t allow your GMS Provider to take a percentage of Credit Card Sales as a method of payment.

This is relatively new to the golf industry. If your GMS provider wants you to pay for their services by adding some “juice” to your merchant processing fees, then you’re likely paying more than you think.  They know more than you do about your own merchant processing statement and it is purposely confusing. Your statement is designed to be deceitful, and now your GMS Provider is making it worse by being a part of the problem.

Our goal is to be transparent with our customers. There are too many shady things happening in this industry. Use these tips to make sure you’re putting yours course in the best position to be successful.  Every little bit helps.