The Pizza Insider: April 2015

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Thursday, April 23, 2015

Save 40% on Credit Card Processing Fees

merchant credit card fees

I don't know about you, but I’ve had credit cards and payment processing on my mind a lot lately. I’m currently working on two articles related to the topic—one that focuses on POS systems and the other on the need to adapt to EMV cards that will become more standard this October.

During my research, I came across a company that offers operators access to paying direct cost for all of their payment processing. What does this mean for you? To start with, unlimited credit card processing at direct cost with 0% markups, no ancillary fees, and no contracts or volume restrictions. Using this model, many are already saving 30% to 40% on credit card processing fees.

While there are similar payment models such as PayPal and Square out there, Suneera Madhani, CEO of Fattmerchant, says that his company is the first to market with a direct cost program.

Madhani sat down with The Pizza Insider to explain more about what direct cost payment processing is, how your individual pizzeria can benefit, and the inspiration behind his business.

The Pizza Insider: What is flat-rate membership and how can it help a pizzeria operator?

Madhani: Flat-fee membership processing is subscription-based, so customers pay a flat monthly membership fee to get access to paying direct cost for payment processing. Fattmerchant is the only subscription-based merchant services provider offering unlimited credit card processing at direct cost with 0% markups, no ancillary fees, and no contracts or volume restrictions. This fixed membership is especially valuable for pizzerias that have fluctuating customers and processing from month-to-month.

The Pizza Insider: Is this a new technology or are there several companies offering this option?

Madhani: There are other companies offering alternative payment models using flat rate pricing, including PayPal, Intuit and Square. They have been successful because customers resonate with their simplicity. However, even these models have hefty markups built-in. Fattmerchant is the first to market with a direct cost program, so all customers—regardless of size—get access to direct industry pricing for credit card processing.

The Pizza Insider: How much can the average pizzeria operator save on credit card fees using this method?

Madhani: Since we have no markups, we never profit from a customer’s volume. The average customer can save between 30%-40% on credit card fees with our model. We are currently working with several pizzeria clients and they are saving more than $2,500 annually just on credit card processing fees.

The Pizza Insider: What is the procedure if an operator already has an existing POS/merchant service? Is it easy to switch over?

Madhani: There is free equipment offered with each of our memberships. All merchants have to update their equipment by October 1st of this year in order to accept the EMV chip card technology. All of our terminals are already EMV-compatible and come for free with our Grand plan. If an operator already has an existing POS system, we can integrate within their platform seamlessly; it is just a matter of switching some numbers on the backend so we become their processor, but everything else stays the same. We can integrate within most POS systems, and have a robust suite of technology tools to offer as well.

The Pizza Insider: With the fees removed, how does your company benefit from offering this service?

Madhani: Our bottom line is that we make your bottom line bigger. I started as an agent in merchant services and I worked with all of the major banks, and I really disagreed with the lack of transparency coupled with the constant nickel and diming of our customers. I took the idea to my boss at the time to open up direct cost to all merchants, regardless of their size, and just charge a flat monthly membership. They dismissed the idea, so I left and started Fattmerchant. Fattmerchant is in the interest of business owners; we aren’t here to take home large sums of money from our merchants. Whether they do a dollar in processing, or $5M in processing, we still just charge the flat monthly membership. We are here to bring much-needed disruption to an outdated industry.

UPDATE: One of The Pizza Insider's readers asked for an explanation of a couple of the terms used here. Suneera provides information below.

No contract - Customers fill out an application to apply with Fattmerchant, but there are no terms of working with us that they have to agree to. Our customers operate on a month to month basis. Since there is no contract, there is no cancellation fee for terminating services with us. A customer can call up and cancel any time, without any penalty or hassle. 

Direct cost - Every time a credit or debit card gets processed - whether it is swiped or keyed in - there are rates associated with it. This is known in the industry as "interchange." Interchange is the direct cost for credit card processing, and the rates are set by the credit card companies themselves so they are the same across the board for every provider. The difference between Fattmerchant and all the other guys is that with Fattmerchant, you pay the direct cost of credit card processing with no markups or percentages on top.