Case Study: An Automotive Parts Wholesaler with Crucial ERP Integrations
Many businesses rely heavily on industry-specific ERP systems. Sometimes, these systems have proprietary integrations or exclusive relationships with a single, or a limited number of, credit card processing company.
When this is the case, companies may feel “stuck” with their processor simply because they don’t want to lose the benefits of their preferred ERP system. Unfortunately, this can create a situation where processors have the freedom to charge whatever they want, often leading to higher processing rates than necessary.
So, what can businesses do when they find themselves in this position? We recently helped a client navigate this very challenge, and despite being locked into their processor, they were able to reduce their processing fees without disrupting their existing payments stack.
Here’s how they did it.
The challenge:
The client in this case is a wholesale distributor of automotive parts and supplies with multiple US distribution centers. Their clients include automotive stores, customizers, and service shops, and they process over $3 million in credit card transactions per month.
Their business relies heavily on an ERP system that they absolutely love. It’s a critical component in their operations, and functions incredibly well for their needs. But their ERP system has an exclusive integration with one specific credit card processing company. Because of this, the client is locked in, unable to explore alternative processors without disrupting their operations.
The reason this is a problem? They were being greatly overcharged in their processing fees.
Feeling trapped, they sought a third-party payments analysis, hoping to identify ways to trim processing costs without disrupting anything else.
Many businesses believe that either negotiating with their processor, or changing processors, are their only viable options to cost reduction.
Fortunately, that isn’t true.
Is our account setup correctly? What incentive does our processor have to correct these problems?
The solution:
Verisave was able to help the client identify two key channels for savings that wouldn’t require them to switch processors or disrupt their ERP integration.
Payments Workflow Diversification:
By carefully reviewing their payment processing setup, Verisave found that not all of the client’s transaction volume needed to go through the ERP integration. This provided enough leverage to justify lower processer-based fees, in what was ultimately a win-win situation for both parties.
Optimizing Their Back-End Account Settings:
Verisave’s team also identified that the client’s merchant account was misconfigured on the back end. As part of this, the industry code associated with their American Express transactions were triggering higher retail-based processing fees. After identifying this issue, Verisave’s team was able to correct the misconfiguration without impacting the client’s payments stack.
By addressing both of these factors, the client reduced costs significantly while retaining their processor and ERP system.
What to Know:
Any business that feels “stuck” with a processor—whether due to a proprietary ERP integration a critical banking relationship, or other factors—can benefit from a third-party analysis of their merchant account. Key areas to focus on include:
- Ensuring that the account is properly configured
- Determining whether the entire transaction volume needs to go through a single processor and/or workflow, or if it can be diversified across multiple channels
Additionally, there are often other nuances within each merchant account that may lead to cost savings, depending on how the account is structured.
Ultimately, a reduction in wasted spend is entirely possible without disrupting your processor relationship or ERP integration.
For this client, Verisave’s efforts resulted in a significant cost reduction. They were able to eliminate $12,125 per month in processing fees. The client’s effective rate dropped from 2.63% to 2.26%, providing them with ongoing savings without any disruption to their operations.
With their payments system now optimized, the client is in a stronger financial position, and their reliance on the current processor and ERP system no longer feels like a financial burden.
Quick Facts: Automotive Parts Distributor Account Optimization
- Beginning Overall Effective Rate: 2.63%
(Overall Effective Rate is the percentage of a transaction total that gets charged as a processing fee) - Target Overall Effective Rate: 2.26%
- Account Areas Affected: 4
- Total Monthly Cost Reduction: $12,125
If your business is looking to better manage your merchant account or reduce fees, we’re here to help. We fix and monitor your existing merchant account, and we bring that money back to you. No need to change processors or add a project to your team’s already hectic workload. Schedule a consultation today.
Verisave is a third-party cost-reduction firm specializing in merchant accounts and credit card processing fees.
Verisave is not a payment processor, and is not affiliated with any processors, card brands, or banks.
Verisave has more than 20 years of experience optimizing and monitoring the credit card processing industry.