Processing Payment Processing
With all due respect to Ferris Bueller, “The credit card processing world is changing pretty fast. If you don’t stop and look around once in a while, you could miss it.”
As operators of golf courses, you know merchant processing used to be a pretty predictable situation. Customers swiped their cards in that electronic brick on your counter. You reconciled the charges with your POS system. Your bank account received the funds in a few days. Monthly statements came in the mail that showed what you paid in fees. Rinse and repeat.
Reading those monthly merchant processing statements has always required a decoder, and it only got more challenging when PCI compliance came into the picture (fees for what?), different kinds of cards were being used (debit, rewards cards, etc.) and swiping took on a new meaning (at the counter? Online?). Each of these variables caused changes in rates (someone has to pay for all those cardholder rewards), but you trusted the system was treating you right. When it was revealed mysterious charges were levied on golf courses a few years back by one of the leading processors (who is now under FBI investigation), mistrust entered into the system. Eyes started opening.
It also used to be that every three days someone was knocking on your door to become your new processing partner, always promising lower rates. Now, it seems those visits have nearly disappeared, because courses find themselves limited to working with only the processors fully integrated into their golf management software (GMS) systems. The software companies have become the gatekeepers, and in some cases, you may not have a choice in who processes your payments. If you want to change processors, you may have to change GMS partners. I fear the limited choice stifles competition among processors, therefore allowing a situation ripe for high rates. In addition, I believe the GMS providers – and maybe even the OTTAs – are looking to merchant processing as a rail on which to ride new pricing schemes. For example, you may find some software providers offer “free” software, as long as you’re agreeing to use their merchant system. Just goes to show how much money can be packed into those fees paid by course operators. Twenty five cents here. Fifty cents there. It all of a sudden added up to tens of thousands of dollars by the end of the year. (Editor's note: it's better than bartering tee times for services and giving away price control!)
What I’m also seeing is a shift in who pays for merchant processing. Ever since a 2017 Supreme Court ruling that lifted the ban on surcharging (in most states), more and more merchants around the country are adding “surcharges” to their bills. The consumer may now pay 3 percent if he or she wants to use plastic. This will be interesting, because it’s been unpopular to be the merchant that charged fees for plastic-wielders, but why should all those loyalty rewards (airline tickets, gift cards, etc.) be paid for by merchants like golf courses? As a result of surcharging, courses may have more consumers willing to pay cash. Many private clubs have shifted processing fees to members paying for dues with plastic instead of ACH. The movement is on, folks. I just want you to be prepared.
Amidst all this, I’m pleased to let our readers know First American has just come on board as a new Smart Buy supplier for merchant processing. One thing we’ve learned at NGCOA is we need to be closer to this transactional business, and we are encouraging golf software companies to integrate with First American for two reasons. One is to inject choice into the formula – a good thing for golf courses. Currently, Jonas clients are able to choose First American, and we understand more GMS integrations are coming. The second is using First American ultimately results in supporting NGCOA and our work to help you succeed.
NGCOA is looking out for you. If you’re not a member, there’s been no better time to join. Join at ngcoa.org/join