There’s more to merchant services than just accepting credit card payments. Here’s how to figure out your own priorities as you look for a vendor.
March 15, 2021 4 min read
This story appears in the March 2021 issue of Entrepreneur. Subscribe »
Fifteen years ago, Tom Epstein launched Franchise Payments Network for one simple reason: He didn’t see any vendors catering to the franchising industry. “Franchises are all about creating consistency for the customer, but we didn’t see anyone offering that to the actual franchise systems,” Epstein says. Over the past decade and a half, he’s seen the franchise world grow, evolve, and adopt new technology — but he still sees franchisors and franchisees underestimating the importance of finding the right payment processor. Here are five things to remember as you vet your options.
1. Create consistency.
Franchisors should focus on finding a payment processor that can offer system-wide support and treat every franchisee equally. “Choosing a partner for your entire system ensures consistency of service, but it also guarantees that any individual franchisee will be able to get a quicker response rate from that provider,” Epstein says. “If franchisees within a system are choosing to work with small, independent merchants, that creates confusion. The merchant will never understand the nuances of the entire franchise system.”
Related: How Businesses Can Process Payments Without Stress
2. Seek out franchise experience.
“With any vendor category, it’s imperative that you look for partners who understand franchising,” Epstein says. “The relationship between a franchisor and a franchisee is a unique one, and though they both want the system to be successful, they also have individual goals. Someone unfamiliar with the industry may not understand how to meet and serve those goals.”
3. Think big, even if you’re small.
Young franchises may find comfort in choosing to work with the local sales rep of a large payment processor, but Epstein warns against that. “A lot of franchisors, when they have five locations, will work with a regional sales rep at a big vendor because it’s easier to lean on someone local,” he says. “But as you grow, it’s going to be difficult for that local rep to service your business on a national level — and they’re not going to be eager to pass your account off to a colleague who can.” Starting with the national sales rep, he says, sets you up for success, now and later.
Related: 7 Predictions for the Future of Payments in a Covid World
4. Look for loyalty.
The pandemic illuminated the importance of effective loyalty programs. “As sales dropped in 2020, businesses had to get the most ROI from their existing customers,” Epstein says. Giving customers a reason to stick with your brand and operation has never been more important. But if your payment processor offers loyalty programs, make sure it’s not a one-size-fits-all option. “Work with your vendor to build a program that makes sense,” Epstein says. “For example, if you run a men’s hair salon, it makes sense to incentivize customers to rebook for every four weeks. If you don’t, you could lose them to a competitor.”
5. Prioritize protection.
Once you select a payment processor, make sure their systems and equipment will protect your business. “If you’re a franchisor and you’re letting franchisees go pick up a residential-grade router from Best Buy to handle their in-store connections, you’re opening yourself up to security vulnerabilities,” Epstein says. “Find a vendor who can walk you through these choices and understands payment card industry compliance. Make sure you’re locked down and no one can get into your systems.”
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