The payment-processing industry can be cut-throat, but it is highly profitable. You have to go head to head against your competitors on a regular basis. But where does all this start? Read more below on how you can become a credit card payment processor.
How to become a credit card processor?
The idea of the business is straightforward, but it still takes more than a few pieces of equipment and profit projection to get the gears running.
Research Your Target Market and Niche
A good investment always starts with thorough research. Do a market analysis of probable clients in your area, or business partners across the world. What you’re looking for is the dominant niche of retailers who are most likely to avail of your services. Take a look at the services of your competitors and the rate that their customers are paying for it. You would want to offer a more comprehensive deal for the same price as your competitors or for a lower amount.
- Create a survey on businesses in the area.
- Gather data on the most common services they use.
- Check their satisfaction level with their current provider.
- Collect client information such as e-mail addresses or phone numbers.
Generate a Profitable Business Plan
The next step is to create a business plan for your operations. You need to have a scale on how your processing company works. This should cover the services you will offer and the pricing range for each, your sales and marketing force and their compensation. Your business plan will be your guideline and benchmark for all business-related decisions that you will make along the way.
Include all important details such as your capital and how you will obtain it as well as the estimated cost for your operations.
You have two options: franchise a processing company or start independently. If you opt to franchise an existing company, you wouldn’t have to worry about setting up a business model, finding equipment, and most importantly, building relationships with banks. However, franchising will require a huge sum to get started. Not only that, the parent company from which you franchised yours will also cut through your profits and may require you to top up based on the revenue you have generated.
An independent business has its own upside too. It may cost less as you are starting out. You are not tied to any contract which may reduce your profit, but this can be a downside for you as well. Starting out means making a name for such a young brand with many competitors around. You still need to develop relationships with banks you could finance your business.
Get Your Financial Sources Together
You need to consider where to get your main financing and if your capital can sustain the day to day operational cost until you see revenue. A credit card processing company needs a minimum of $50,000 capital on average. This is based on a small business with a physical office location. You have to consider a secondary source as a fallback plan in case unexpected expenses arise.
Launch, Market, Succeed
The last step is to execute your business plan. The key to continuous growth in a business is having a good marketing strategy. Given the many competitors already established, you need to make your business stand out. Reach out to business networks and other organizations to widen your client reach. Prepare a template for quotations and contracts to close a deal as quick as possible. And when a customer entrusts their company on you, always put out the best service as possible. Referrals from merchants are very important in growing your company.
How to sell merchant services
The hows of selling merchant services start with you. As a merchant services agent, you need to familiarize yourself with the whole flow from transaction processing to acquiring payments with your bank.
You need to be an expert on your role as a payment processor to be able to prove to merchants that you are much worth paying for than other Merchant Service Providers (MSPs).
In a way, you are a wholesale buyer of processing rates, which you can then retail to merchants at a profitable price. As your business grows, the residual (profit) amount you get grows with that as well. But to grow in your trade, people have to recognize your business assets. This is where your marketing strategy works for you.
Here are some of the business assets you can prepare for your credit card payment processing company:
- Business Cards
- Social Media
- Business Website
- Local Directory
- White/ Yellow Pages
Tips for selling merchant account services
When you’re selling merchant account services, you are not selling credit card processing service per se, but you are actually selling yourself. Most potential clients are already aware that they need credit card processors. What you want them to see is why they need your own services. Why should they choose you, if there are hundreds of others who can offer them the same thing?
Show the benefits clients will earn from you and not just the special discounts they might get from your company. A higher profit drive is more appealing as a sales pitch rather than just focusing on the low price offer. An alternative to retaining your rates is waiving other fees such as annual payments or termination fees. You can also show the job done with your other merchants. If you can, show numbers as proof of growth, and use your merchants’ testimonials to back up your services.
Never be afraid to pitch yourself to potential customers. Reach out to every possibility and strike the iron while it’s hot. You should also follow up on your initial pitches to clients. Building a better relationship with them will get you a long way when they finally agree to sign up to your business.
Individuals ready to go out and start a credit card processing company have all the tools they need for success with Allied Payments.