Breaking Out of 'The Quarter Business'

Several years ago, I was having a conversation with another carwash operator about his business. When I asked him what his experience was with credit cards, he took a long pause and looked me straight in the eye, saying, “Son, I’m in the business of quarters. Why would I give the credit card companies any of my money?” I strongly suspect he is still in the business of quarters while his competitors are now in the business of dollars.

Thousands of potential transactions are lost every hour throughout North America as customers take their business elsewhere due to the inability of businesses to take their money. The notion that businesses turn away potential revenue seems counterproductive to the goals of any for-profit business. These businesses are not actively losing potential customers because of a bad carwash or through any action of their own. Businesses are losing customers because of inaction on their part to make the necessary improvements to their business operation and take alternative forms of payment.

Consumers are being snubbed at the pump, their local restaurant and at the carwash, as businesses fail to provide the ability to accept their credit cards. In 2005, credit card transactions climbed at an exponential rate compared to previous years. According to credit analysts, each U.S. household has an average of 5.3 credit cards. There are a total of 1.8 billion credit and retail cards in North America. Credit card usage has tripled in the past five years, and yet, there are still business owners who fail to see the need to accept credit cards in their wash bays.

Catering to the New Generation of Consumers

When you lay all of your cards on the table when discussing credit card acceptance in the wash, one thing needs to be very clear. The question is not, “Am I accepting credit cards?” The real question every operator should be asking themselves is, “Am I willing to take my customers’ money?”

We now live in an entirely different consumer economy than we did 10 years ago. Major fast-food chains now have company policies in place that require credit card acceptance at every location. To not accept major credit cards in 2008 for this generation of consumers is no different than putting up a sign on the register that reads, “No Longer Accepting Cash.”

To put all of this into perspective, imagine that 100 random adults over the age of 18 are gathered into a room. On average, 64 people will have enough cash on their person to buy a $2 self-service wash, and just 47 will have enough cash on hand to buy a $6 automatic wash. Conversely, 95 people will have a credit card on their person and will spend 50 percent more time in the self-service bay and buy the most expensive wash package nearly every time.

Don’t Get Stuck Playing Catch-Up

My family had the first gas station in town to offer pay-at-the-pump, even though it was expensive to add at the time. Shortly thereafter, the other gas stations in town either added pay-at-the-pump or quickly became known as “the gas station that doesn’t have pay-at-the-pump.” What I find most interesting is that it is very hard to come back from that kind of stigma. It’s easier to be the first at something than it is to be the competitor always trying to keep up.

Industry Secret: If you add credit card acceptance to an old wash, clean up the bays, put up some new signs and create the perception that improvements have been made, you can raise your prices! Customers will perceive a greater value and won’t blink at the higher cost.

Is the ‘Cost of Doing Business’ Costing You Business?

A common complaint among carwash owners is that credit card companies and banks take a bite out of their profits with each transaction. The simple fact is that merchant processing fees are an associated cost of doing business today. However, costs such as “charge back” fees can be avoided by properly evaluating the various product offerings available on the market. When evaluating your options for card processing, it is advisable to choose one that does not “batch” credit card transactions and, instead, clears the transaction at time of purchase. Batching is the accumulation of captured credit card transactions in the merchant’s terminal or POS awaiting settlement.

By utilizing a system that clears each credit card transaction at the time of the purchase, businesses are able to cut their losses by rejecting credit cards that are declined for any reason — from insufficient funds to being reported stolen.

Wash owners should be aware that there are a lot of products available on the market that can accept credit cards. Nearly every wash system comes with credit card acceptance as an option. Few of these systems offer the fraud protection features that guard against the hidden costs of accepting credit cards. But now, as advances in technology have started to sweep throughout the entire carwash industry, carwash owners now have a lot of options available to them.

Do your homework and ask lots of questions.

Properly Advertise Cashless Payment Options

As a carwash owner, your responsibility is to your customers and to educate them on their options. It should be rather apparent that unless you actively advertise the acceptance of credit cards at your wash, new potential customers will never know the services are even available. Visa and MasterCard spent more than $1.² billion dollars in 2006 on brand-name recognition. I recommend creating the biggest sign your city will allow letting your patrons know, “We Accept All Major Credit Cards,” followed by images of credit card company logos.

Final Thoughts

I’ve seen the costs and statistics, and heard the testimonials from both sides of the fence on this issue. My family owns a carwash, and 80 percent of their carwashes are purchased by credit card. In speaking with other wash operators, some claim to lose money on credit cards. If an operator is losing money on credit cards, there is something wrong with how their credit cards are being processed.

The No. 1 culprit in high credit card fees is being stuck with a merchant processor with rates that are out of line in some aspect. Far too many wash owners become victims of “junk fees” and end up paying much more than they had originally signed up for. A common tactic for credit card processors is to advertise their “best rate” on a quote. What sounds like a great deal per transaction quickly gets dragged into the dirt by high monthly statement fees, Web-access fees and monthly minimum charges.

Do your research, ask lots of questions and remember: If it sounds too good to be true, it probably is.

Ryan Carlson is an industry expert on consumer buying trends and carwash promotional marketing technologies. Ryan speaks regularly at trade show seminars about successful carwash marketing and cashless payment technologies. To contact him, e-mail ryan@washideas.com or visit www.washideas.com.