BY SUNEERA MADHANI
If you’re like most credit unions, small businesses are your bread and butter. Your success hinges on their continued success. Payment processing costs and loan denials may be getting in the way of that success. Here are some tips on how to overcome these obstacles.
A recent partnership between merchant services provider, Fattmerchant, and Axiom Bank is indicative of a new frontier in effective, mutually beneficial partnerships for credit unions and community banks with payment processors. For the more than 5,000 U.S. credit unions, small business banking makes up a large portion of its customer base. The relationship small business owners have with their credit union can make a massive difference in the success or failure of a company.
Consider the role your credit union plays for each of your small business customers. Most entrepreneurs come to their bank or credit union looking for help in getting their big idea off the ground. Whether it comes in the form of a loan, a new account or just simple guidance, a credit union can be a business’s most loyal ally. While your credit union may be supportive through a company’s shaky beginning, that support shouldn’t waver once it’s on its feet. In fact, your branch should be even more creative, coming up with ways to keep putting money into your customers’ pockets.
One of the most surprising ways businesses lose money is through payment processing. Every swipe of a card, online purchase or automatic payment has a price tag associated with it for every company. However, for certain merchant services providers, that price tag may be much higher than others. For credit card transactions, the interchange rate, or the direct cost of every transaction, is set by the credit card companies and is the same regardless of which provider your customer uses. In addition to this rate, however, some processing providers may be introducing additional unnecessary markups. Whether it’s a brand new entrepreneur who just opened the doors to his or her first business or a seasoned professional, these fees can add up quickly, easily cutting into bottom lines.
Banking institutions traditionally use third-party vendors to offer merchant processing services. Most of these merchant processors charge high markups, such as ancillary fees and long-term contracts with substantial penalties. However, these institutions, especially community banks and credit unions, are turning over a new leaf of modernization when it comes to the types of payment processing they recommend to customers. Take the case study of Fattmerchant and Axiom Bank, for example.