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Mike Anderson

mike anderson autobody newsMike Anderson is the president and owner of Collision Advice, a consulting company for the auto body/collision repair industry. For nearly 25 years, he was the owner of Wagonwork Collision Center, an OEM-certified, full-service auto body repair facility in Alexandria, VA.

 
Friday, 01 October 2021 20:59

From the Desk of Mike Anderson: Auto Body Shops Can Take Control of Credit Card Processing Fees

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...their processing costs: divide the total fees paid in a given month, by the total sales dollars paid via credit card for that month.

 

The bottom line on processing fees?

 

“It ranged from a low of just above 1.5%---1.64%, to be exact---to more than 4%---4.2%, in fact,” Mark told me. “This is often an ‘unknown cost’ for a lot of shops. They know they pay something, but have never really taken a close look at what it’s costing them to offer their customers that convenience. That’s what I wanted to point out to them: is it worth giving up 3 or 4% of the bill to allow customers to pay with a credit card versus cash or a check.”

 

Remember this percentage erodes your bottom line!

 

So what can auto body shops do about this cost?

 

First, they may want to place a limit on the dollar amount a customer can pay using a credit card. Say a customer’s vehicle is in for a $3,500 repair, including their $1,000 deductible. Do you allow the customer to put the insurance payment into their own account and pay the whole $3,500 on their credit card? If so, you just paid $105 (if you pay a 3% processing fee) for that transaction.

 

But what if you placed a cap of $1,000 on the amount the customer can pay by credit card? They still get the convenience of paying their deductible by credit card, but you paid only $30 in credit card processing fees because the insurance portion of the bill wasn’t included in the credit card transaction. In this example, the shop saved $75; multiply that by the number of credit card transactions you have per month, and it adds up to real money.

 

There’s some indication a growing number of collision repair shops are placing such limits. One of our “Who Pays for What?” surveys in 2020 found 76% of shops had no such limit. This year, the survey found that had fallen to...


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