Partnering with credit-card processors can help operators maximize point-of-sale payback

Nation's Restaurant News, Sept 7, 1998 by Gary T. Staub

Gary T. Staub is group executive of business development for Paymentech Inc., a Dallas-based bank card processor. A restaurant holding company with 65 locations recently encountered problems with credit-card transactions for one of its chains. The credit-card processor said that the problem was within its point-of-sale platform.

The POS vendor threw the ball into the court of the communication interface. That company pitched the problem back to the processor. As the game of hot potato ensued, missing transactions turned into missing money for the operator. Finally, the company's chief financial officer had to take charge by calling the various players together. Sound familiar? It shouldn't. Yet handling noncash payments, which constitute 35 percent to 55 percent of total sales for most restaurants, is an unavoidable challenge. Given the number of providers involved, restaurateurs can find it difficult to pinpoint and resolve credit-card problems. What's the solution? This restaurant company needed one payment-related vendor, one that touched all points of the payment cycle to take the lead in working with the other point-of-sale players. That vendor is the credit-card processor. Some processors have recognized the growing demand for that valuable service. From the local site to corporate headquarters to the units, processors can coordinate the electronic payment chain of vendors for continuous and efficient service. Aside from turf battles and finger pointings, financial providers have to share an interest in keeping customers happy. Here are five ways whereby you, the restaurateur, can direct your payment processor to take charge of ensuring service delivery from the entire payment processing team. The payoff will be smoother operations, quicker resolution of problems and better bottom lines. (1) Manage vendor cooperation to ensure timely installation and setup. "Coopetition" is the new rule within payment services. It simply means that companies, while competing in some areas, will partner on another front to deliver a balanced customer solution. Customer-focused companies practice "coopetition" by stressing cooperation. With connections across the POS spectrum, the credit-card processor can facilitate cooperation between hardware vendors, network providers, third-party programs like frequent dining cards, specialized help desks and clearing banks. Nowhere is this more important than during the installation and launching of the service. A payment processor setup team should analyze and chart the rollout of multiple locations and platforms. Restaurateurs require expert training on new payment applications during a conversion. Ask your processor about dedicated specialists who manage four basic functions of implementations: database setup, terminal programming and deployment, technical interface and bank deposit settlement. Restaurant owners should seek processors that have developed relationships with value-added resellers, or VARs. Such programs will showcase ongoing, regular communication between VARs and the processor as well as formal agreements that define roles and responsibilities. In addition, hardware will be certified on the processor's network, or there will be a documented, formal certification process. Such payment providers can assist with programming issues, especially when operators add credit-card interface to POS platforms. (2) Lead the way in new-product development and program enhancements. Credit-card processing mistakenly is viewed as a commodity service, but it is an important function performed at the point of sale. However, transactions are a small part of the financial picture. Daily account adjustments, reports for accounting purposes and data management programs are tools that simplify reconciliation efforts at individual locations and headquarters. Processors bring value by supplying additional management tools for "downstream" reporting and accounting. Those tools and services for creating a single delivery channel for reviewing and accessing bank- and chargecard transactions now exist and can remove the hassles of chargebacks and statement adjustments. Through the use of those tools, restaurant managers on a daily basis can review all credit-card submissions, analyze the transaction amounts and submission batches that were paid, and note which payments the restaurant received on any given day. The payment processor ensures that appropriate bank-card data are delivered securely without having to mingle with the proprietary databases of charge- and credit-card issuers. While protecting card association information, the processor places the interests of the restaurant above the "turf concerns" of competing card brands. Other processing services now available are reporting tools that record and log credit-card transactions by restaurant location, such as downgrades, which occur when credit transactions fail to qualify for the most favorable rate, resulting in higher fees paid by operators. Processors can provide monthly reports, in hard copy or on CD-ROM, which help chains to identify and remedy downgrade situations and can result in big savings. Processors also can supply the latest news about communications and hardware products. Communication options often are overlooked. For example, devices now exist that reduce the need to split-dial for American Express transactions, thereby reducing communication costs. New POS terminals include electronic ticket and signature capture and portable credit-card readers. Most processors are very knowledgeable about those terminals and can be valuable information resources. Many processors also are involved with regional tests of smart cards around the country. Specific to restaurants, processors currently are exploring how credit-card numbers can become the data identifier for frequent-dining programs. The ability to "key off' card data can open the door to a number of customer-focused scenarios for operators, such as the ability to recognize a cardholder's birthday so that wait staffs automatically present patrons with gift certificates. In that context restaurant owners should ask their payment providers to assess the opportunities of emerging POS technology. (3) Take the lead role for all levels of customer service. All processors must guarantee fast help-desk response times. The boost for a larger chain or corporation comes in finding a processor offering multilevel customer service support that includes dedicated national account managers and procedures for dealing with VARs. Restaurants should seek payment processors that have consultative and technical support philosophies. Foodservice managers also should ask if the processor has relationships with industry or hardware-specific help-desk services, like Merchant-Link Inc., which supports the MICROS point-of-sale platform. In the consulting mode processors also should regularly audit an account's vital functions to ensure no "bugs" are lurking in the payment universe. When surveying a processor about customer service, look for expertise in some of these areas. Does the processor have service agreements with VARs that define the responsibilities of all parties? Does the processor conduct regular customer surveys? Does the processor coordinate all players when an upgrade is scheduled? Does the processor have dedicated programmers who also serve as technical resources? (4) Champion restaurants before the card associations. Active participation and representation by processors on MasterCard and Visa committees will ensure that the concerns of restaurateurs are being heard and are best served by the card associations. Processors can have input into rules and regulations and other directives. The processor, through regular customer communications, should make operators aware of rate changes, operational regulations, and marketing and promotional programs. Holding companies that operate a number of chains also should investigate the value of outsourcing all credit-card services to one provider. By counting transaction volume as one company, all locations benefit from any potential discounts based on increased revenues and transactions. (5) Think like a team owner. Those are just a few ways that restaurateurs can leverage their relationships with card payment processors. Today's technology requires service delivery by a team of players. As the restaurant operator and end-user, you are the team owner. Although the common game plan is to satisfy the customer, not all payment processing providers follow the same playbook. Restaurants need to choose a team captain. A creditcard processor that is dedicated to the restaurant industry is the natural choice. A restaurant company that charges its processor to lead the team will see a payoff in reliable and high quality point-of-sale services.