Improving Profit Margins Through Better Payment Processing

Every business wants to increase its sales and decrease its costs while improving customer service and retention. But when seeking expenses to cut, manufacturing and distribution companies often overlook the costs of payment transactions.

Mnet 132710 Improving Profit Lead

Every business wants to increase sales and decrease costs while improving customer service and retention. But when seeking expenses to cut, manufacturing and distribution companies often overlook the costs of payment transactions. For most companies, the expense of payment processing is simply an accepted cost of doing business.

And while negotiating with their payment processor can result in a reduced rate, this approach addresses only 10 percent of the total payment processing cost. The real value can be found in managing the payment processing procedure, which can tack on up to 40 percent of their total expense. So, how can companies learn to manage this function correctly and decrease costs while improving profitability?  

The landscape of payment processing is extremely complex and one that is nearly impossible for a company to navigate alone. Many businesses currently use standalone credit card terminals and very basic software applications to send transactions and process payments. But without the right data and management of transactions, they downgrade and end up costing their business up to 40 percent.

Automation of the process is critical to managing rising transaction costs and related fees. The process of transaction management focuses on managing 100 percent of the total cost associated with a payment transaction — including the management of interchange fees. Businesses spend significant time trying to negotiate reduced fees and often hit a roadblock with payment processors not willing to lower rates beyond a point. But by using an intelligent tool, companies can see tremendous improvements in profit margins.

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