05/10/2024
Own an Automotive business??
Processing payments in the automotive industry, encompassing auto repair, dealerships, paint and body shops, tire stores, towing services, and aftermarket services, presents distinct challenges. Unlike retail or restaurant sectors, transactions in this domain typically involve higher amounts, ranging from $50 to over $10,000, with customers often using credit cards to cover deductibles, which can vary from $50 to $5000. Consequently, processing fees, which comprise a percentage and a flat per transaction fee, can escalate quickly, sometimes exceeding $50 for a single transaction. To mitigate these costs, here are some strategies for auto businesses:
1. Optimize Fee Structure: Given the substantial transaction amounts, even minor differences in processing fees have significant financial implications. While industry norms range from 2% to 5%, exploring options with a markup as low as 0.1% to 0.5% can yield considerable savings. Avoid tiered pricing plans, which often conceal hidden costs.
2. Assess Effective Rate: Evaluate your monthly processing fees against the total card sales for the month to determine your percentage effective rate. If the rate exceeds 2.5%, opportunities for cost reduction likely exist.
3. Review Pricing Plan: Ensure your processing statement does not indicate a tiered pricing plan, identifiable by terms like "Qualified," "Mid-Qualified," or "Non-Qualified." Such plans can obscure true costs and hinder transparency.
4. Incentivize Cash Payments: Mark up prices to cover card usage fees and offer a 1% to 4% discount for customers who pay with cash. Automation through credit card terminals streamlines this process.
5. Explore ACH E-Checks: Consider accepting Automated Clearing House (ACH) e-checks, which incur only a flat fee, potentially yielding additional savings compared to card transactions.
6. Seek Expert Consultation: Contact payment optimization specialists for tailored strategies to minimize processing expenses. Horizon Payments offers no-obligation strategy sessions to assist businesses in optimizing their payment processes.
By implementing these measures, auto businesses can realize significant savings on processing fees, with some entities in our network saving hundreds or even thousands of dollars monthly. Whether you operate a small family-run business or a large enterprise, Horizon Payments is equipped to support your payment needs, regardless of location or operational scale.
