Payment processing

Understanding Car Dealership Payment Processing

If you think that buying a car requires planning and careful deliberation, try running a dealership. These companies have to adhere to strict budgets, so every sale can make a huge difference. As a result, dealers have to make the best decisions in all aspects of their companies.

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Unfortunately, this can be extremely difficult when it comes to payment processing. Many plans aren’t suited toward dealerships’ business models. Unfortunately, customers often want to pay for part of their orders on credit, so forgoing this method altogether can result in lost sales. As a result, dealers can find themselves in a tough position.

But there are ways to escape this situation. If you’re a car dealer, knowing about these perils is the first step to avoiding them. This article can teach you to do just that. It will show you how the wrong processing plan can hurt your business. This will help you find the right processing plan so you can avoid these problems altogether.

Profits Aren’t Guaranteed When Processing Fees Are Involved

As a car dealer, you know that selling big-ticket merchandise doesn’t always result in big-ticket profits. A $30,000 car usually only nets a dealership about $1,000 to $2,000 in profit. These businesses have to sell a lot on a tight budget to survive, and the wrong processing plan makes this task even more difficult.

To pay for their processing services, companies give their merchant services providers a cut of their credit card revenues. Usually, this adds up to one to two percent of their processing volumes. Unfortunately, expensive items like vehicles incur heavy fees. These costs can decimate a firm’s profit margins, which is why many dealers refuse to let customers pay for their entire orders on credit.

Your Budgets Will Become Very Unpredictable

Car dealership payment processing isn’t just potentially expensive. It’s also unpredictable, and this can be a real liability to any business that wants to run a tight ship financially. Most plans revolve entirely around rates that apply to sales volumes, which makes it extremely difficult to calculate how much a company must pay each month.

When you factor in the host of hidden fees that usually apply to these agreements, predicting a bill becomes a monumental task. These expenses can also be frustratingly obscure, from administrative fees to paper costs and more. You’re sure to spend more time puzzling over a complex monthly statement and less time actually selling cars if you choose the wrong processing plan.

Your Entire Financial Stability May Be Put in Jeopardy

A business that avoids chargebacks is usually a successful one. A company that attracts them is probably not. Most merchant services providers are extremely leery about these penalties. They usually suggest that a company could default on its account, but it may also mean that it’s involved in suspicious, possibly criminal behaviour.

Chargebacks are even more devastating in car dealership payment processing, though. Since these companies sell expensive merchandise, even one chargeback can take a toll on their merchant accounts. If your dealership incurs too many of these penalties, it may default on its account and result in irreparable damage to your organization’s processing capabilities and credit.

The Right Plan Can Help You Avoid All of This

While these problems are significant, they’re far from universal. The right plan can help you avoid all of these pitfalls. That plan is an all-inclusive car dealership payment processing agreement.

These partnerships offer you a flat rate on your processing volume with no other fees. You’ll also get protection against chargebacks, as well as fast-batch delivery. This gives you merchant services that suit the way you do business.


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James Newman

James brings over 30 years of experience in the telecommunications and merchant services industry to his role as Client Relations Specialist for BNA Smart Payment Systems. With a focus on sales, marketing and client services, the last 10 years have been spent with BNA. He has completed over 2,000 hours of professional business training, including professional sales, solution selling, conflict resolution, appraisal workshop, strategic marketing, and financial analysis. Outside of work, James is almost constantly reading fiction. In direct contradiction to this rather silent interest, he took up the guitar six years ago and regularly, happily, and shamelessly destroys the peace and quiet of his family home.

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