Getting Skinny With It: SMBs And The Cost of Payments

Data, data everywhere, so why not stop and think? All too often it seems that small merchants don’t stop to smell the eCommerce numbers. Or open their statements. Or know how their business is doing.

In an interview with Karen Webster, Suneera Madhani, Founder and CEO of Fattmerchant, the Data Drivers topic was: Why not get more drive out of the data?

Data Point Number One: 32 percent

This is the percent of SMBs who do not look at their statement when that statement comes from the acquirer. It follows then, as Webster noted, that these business people do not understand the cost to them of accepting online payments.

“I don’t necessarily think it is because they do not care,” said Madhani. “I think it is because of the way they have been trained by the industry … those statements are so confusing,” and are designed to be non-transparent, laden as they are with merchant fees and variable costs.

It’s also true, Madhani said, that the rates that these merchants thought they had agreed to were not in fact the rates that have been in place.

“That is how Fattmerchant came about,” she told Webster, with the first several letters standing for “fast, affordable transaction technology, and the first thing we did is turn the pricing of those services up on its head,” as a subscription-based merchant services provider that makes monthly processing merchant fees transparent and predictable,  she noted.

Data Point Number Two: 25 Percent

This is the percentage of small businesses, according to a Forbes study, that have experienced a chargeback. So, does that mean that the third of merchants that do not look at their statements also not know about the chargebacks that have come their way via fees or withheld funds?

“It’s kind of a reaction,” said Madhani on this data news, rather than being armed with the same knowledge in real time, as merchants are not using all the tools at their disposal.  Money missed, money lost, bedeviled in part by what Madhani termed the “wrong 800 numbers,” which can cause enough frustration to spur the merchant to let the online payments slip through his or her fingers.

Data Point Number Three: 51 Percent

This is the percentage of small businesses that say that data is critically important to running their operations, which begs the question, what’s with the other 49 percent?

“In 2017, by now, 100 percent of those business owners should have responded” that data in retail is critical, surmised Madhani. “Maybe the other 49 percent are too afraid of technology to dive in.”

Or that they think that it is too expensive to take on technology. Fattmerchant had found that its own customers wanted to know key performance metrics and “yet are still using a basic terminal” over which to conduct business. “There is no data that is being extracted from it,” she said, making it impossible to get metrics about the business in real time.

“SMBs want to look at the [company’s] dashboard and see trends,” she said.  “Businesses are omnichannel. They have a retail location, and then they have online sales, or they have a direct [presence] … they want everything [through the platform] …  linked through one account.”

As for “nice-to-have features” in daily management, companies can get a sense of the lifetime value of their customers and how often that they are returning. For professional services, invoicing features through digital payments are paramount, with direct knowledge of accounts receivable outstanding, for example. Automation remains key, said the executive, growing both the bottom and top lines. Fattmerchant defines SMBs as merchants that log at least $10,000 in credit card payments monthly.

In the end, then, might it be the data that helps companies run lean, while profits run fat?