I couldn’t understand when a handful of clients came to me and said they couldn’t use more than one credit card processor in their pet sitting software system. (They all had the same one.)
It bugged me, as their coach, looking out for their bottom line…. so I reached out to their software company.
The pet sitting software company is very popular, newer, and always improving. Admittedly, they even have a lot of great bells and whistles including a feature that only one other company has.
They are cutting edge.
Always making improvements.
Quick to send and reply to emails.
Overall, they appear to be pretty darn awesome!
So I asked them, “Why can’t my clients use another processor other than the one you are encouraging?” and their reply was basically that they had problems when they had multiple credit card processing companies and they had to only choose one to support.
They said that many were using one processor in particular, so it is the one they decided to “support” on their app.
It didn’t really make sense to me, as they are so cutting edge… but I accepted their response.
Wait….This Pet Sitting Software Company Does Offer Multiple Processors to Accept Credit Cards?!?
A few days later, I had a conversation with another client of mine. She was using this same pet sitting software company AND using a credit card processor who was different than what they said they could support. So I went back to this company and they said some people were “grandfathered” in.
So now, I was really confused. Can you not support it or do you choose NOT to support it, and why?
Something Didn’t Add Up.
What DID add up was the dollars it was going to cost my client in credit card fees and the pet sitting software services. The pet sitting software company she wanted to switch to was double as expensive as what she was currently using. By switching software companies, she would have to switch credit card processors and it would be a fixed rate for processing.
That sounds stress free, right?
Maybe even a good thing?
In a world where there are thousands of credit card rates… knowing that you can count on being charged one percentage and one fee per transaction is pretty darn awesome…..right?
Or at least not all the time.
So I encouraged her to do the math.
Here is an example for those of you reading this:
This breakdown is Credit Card Fee/Total Revenue per Year/Cost of Credit Cards
2% of $500,000 is $10,000
3% of $500,000 is $15,000
4% of $500,000 is $20,000
Or, another example:
2% of $200,000 is $4,000
3% of $200,000 is $6,000
4% of $200,000 is $8,000
This Pet Sitter Did The Math.
She realized that switching pet sitting software companies would double her cost in software (from around $200 a month to $400). Although, this new software company COULD save her some money in her credit card fees… so it sounded enticing.
And that is where many pet sitting companies stop their research and education.
But this pet sitter didn’t.
She asked another credit card company what her fees would be and because of her yearly volume, they could give her an even BETTER deal.
When all was said and done, if this pet sitter didn’t switch software companies and lowered her rate to the competitive company, she could save a lot of money in a year. In fact,
Switching Her Pet Sitting Software Company Would Cost An Extra $8,700.00 A Year!
Over $8,000 difference!
You could buy a small car for that price!
Or 4 MacBook Pro’s!
Or even 4 brand new websites!
That is a ton of money, and for this pet sitter, it was too much money.
She decided to stay with her current software company and switch credit card processing companies to save those thousands of dollars.
Learning About Kick Backs
Kickbacks are something that when a person recommends a product or service, they get something in return. Sometimes they are called referrals. This day in age the big buzzword is affiliate marketing. I earn kickbacks for some things I recommend… but not all. For example, when someone signs up for credit card processing through my contact, I get a referral fee.
So this idea really got me thinking.
How can a company that advertises that they are always making improvements not make THIS improvement and how can their software be so robust that it GPS’s walkers, but they can’t take more than one payment processor?
Yet, I know they can because I have clients doing it?
So… I Called Up WePay.
WePay is much like Stripe, Square, etc. They are an interface that allows businesses to accept credit cards for a low cost without using a gateway. The way the credit card industry works is with lots and lots of numbers and rates. It is a volume based business because the more processing that happens, typically, the better rate businesses can be offered.
This works many ways.
I talked to WePay and you know what they told me? If I was a software company, I could offer 2.9% plus 30 cents per transaction to my customers who were using my software.
Once my clients reached a total of $250,000.00 in charges a month, then I could start making money on the back end. I could negotiate with WePay for a larger personal cut. I was told that the more money my clients charge each month, the more “wiggle” room I could have. So it would go something like this:
2.9% charged to my software users (they are all business owners)
I negotiate 2.5% behind the scenes with WePay and they still charge my customers 2.9%
That extra .4% will go directly to me on the back end as a profit share.
Let me use actual numbers:
$500,000 in revenue a month.
multiplied by .4%
=$2,000 a month
If you are a software company and have at LEAST 100 clients charging at least $10,000 a month…. that is $1,000,000 in revenue a month. That could be $4,000 a month they are making off credit card processing if they were only earning .4%
There are so many variations, and it is hard to estimate anything, but it is safe to say that a software company could make a LOT of money off the charges that my customers make.
While discussing the possibilities with WePay, and telling them I was in the pet industry, they actually named the software company that does this exact type of deal with them and how great it works out.
And Now It All Makes Sense
Listen, I want to be super clear – this is the way that credit card processing works and I am not against it. I am not even against this software company having another revenue stream.
What I am against is the feeling of YUCKY that sits with my clients and I when we asked this software company a direct question and got (what we feel) smoke and mirrors.
Essentially they have the most expensive software (all the power to them!) and they seem to hide the fact that they make money off of that too. I just don’t like that it appears like they are not telling the whole truth or being upfront. Not to mention they are leading their clients to think that they are getting a great deal.
In a world where transparency and authenticity is golden online, I would really encourage them (because I know they will eventually read this) to come clean. So many people would have so much more respect for them.
We aren’t against them making money. We all have choices and business decisions to make. It is more about their refusal to disclose it.
I find it challenging to encourage my clients, whose best interest I serve, to tell them to use a software that is the most expensive, and then they have no negotiating power with their credit card fees on. For that reason, I can never recommend this software.
Know Your Rights With Credit Card Processing:
These are all according to me and what I have learned. Nothing legal about what I am about to share *wink*
- Shop rates like you would your home mortgage.
- Ask your current company to reduce your rate. If they can’t, see #1.
- Go with the company with the best customer service and rates.
- Know that you have the right to have your own personal contact at the credit card company. You should be able to call or email them and they know about you and your business.
- Understand that rates change based off what is going on in the world, your volume, and a bunch of other reasons that make my head spin.
- Get someone on your business team (a rep) that you can know and trust!
- If you get an 800 number and are just a fish in the sea, run!
- Online reviews will ALWAYS be bad. They are full of people upset, especially when it comes to credit card processing. It shouldn’t hold much weight.
My Final Advice:
- You have to be an advocate for your business. You need to know your numbers on a global scale. You need to know projections, if you are up or down, the average price of a visit/walk, how much it costs you, how much you’re spending in labor, how much you want to make, and HOW MUCH you are spending! If you have no clue, my Pricing Structure & Strategy Guide can set you straight.
- You can’t stick your head in the sand. It is one of the most important responsibilities as a business owner. Know your numbers or at least know how to recall them in reports that are up to date and at your fingertips.
- When choosing a pet sitting software company decide on the features that are most important to you and see what company can serve you the best. My top three would be customer service, ability to negotiate credit cards rates, and how they will help improve my processes. My top three, might not be your top three.