Merchants Just Want to Sell More!

by Scott Loftesness on May 20, 2009

in Card Payments, Customer Relationship Management, Merchant Acquirers, Scott Loftesness

Scott Loftesness

Some of us payments geeks often lose sight of what merchants really want – they just want to sell more. Selling more stuff is like 10 times more important to them than saving money on their costs of payment acceptance.

Bill Me Later is but one recent example of merchants (online in this case) will to pay more to sell more – and, through the magic of margin, make higher profits on higher volume. BML’s promotional financing was the key to unlocking merchant acceptance – enabling a win/win for both the merchant and BML.

This morning I happened across this blog post about OpenTable (about ready to have its initial public offering). I was struck by the comment that “across 8,090 member restaurants, the average restaurant pays OpenTable $515 each month.” OpenTable helps those restaurants fill their tables – and gets paid accordingly. It’s a very convenient experience for the consumer too – I’ve been addicted to OpenTable since it first launched years ago!

Here’s a question: how does that average of $515/month that OpenTable earns compare to the money the average restaurant pays to its card acquirer? Not the full merchant discount – just the fees net of interchange. What do you think?

2 Responses to “Merchants Just Want to Sell More!”

  1. Joe Young says:

    First off Scott that was a nice post comparing interchange to something very clever like opentable. IMO I think interchange should be compared to water, electricity, or any other utility required to run a restaurant (or maybe utility fees). Credit card acceptance was once positioned as a way to increase business but that’s “ancient” thinking now that it is almost demanded by consumers. Seriously how much cash does anyone carry around anymore?

    OpenTable is what credit card acceptance was 10 or 15 years ago. Participating in a central technology/planning service like theirs is a huge value add for those establishments who are smart enough to be be on board.

  2. Scott,

    That’s just it – merchants do just want to sell more and if you help boost sales with processing solutions they are in!

    The merchants who are looking to improve experience(s) for their customers and clients rather then what “interchange” and my rates are at are the ones who will be in business for the long haul.

    I still think we are in for some real nice payment solutions in the near future with all the great mobile technology that has arrived, which will open many different solutions like Bill Me Later, etc.

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