As an Entrepreneurial Operating System (EOS) company, your business implements specific processes to keep your team and business on track. It is a way to incorporate a holistic approach to business by building strategic leadership and a driven team mindset. One key EOS method is establishing rocks and tasks for team members as well as the business. Rocks are quarterly or yearly goals and the tasks are the steps that need to be done in order to accomplish those rocks.
As with all businesses, financial evaluation is a primary consideration when setting goals. Therefore for EOS companies, this becomes an important and repetitive rock within the business which is often assigned to the controller or CFO to track changes or identify opportunities to effectively improve the business’ financial performance.
As an EOS based company, Evolve Payment understands the process other EOS companies follow, therefore can connect with the internal steps and requirements other EOS companies need to follow. Since we also follow the EOS methods, our services reflect those procedures and mindsets in order to support our clients through a holistic business approach.
This means supporting clients with the information to track tasks and the deliverables to achieve rocks. Specifically, our merchant processing services are designed to benefit our client’s financial efficiency through implementing the optimal processing and providing ongoing analysis for continuous improvement.
To begin, the following merchant processing key performance indicators (KPIs) are some of the ways your business can measure or gauge your business’ merchant processing and understand areas that provide an opportunity for improvement. This ultimately will contribute to your company’s overall EOS process by evaluating the process to reduce expenses and adhere to your financial rocks.
Yet, even if you are not an EOS company, the following merchant processing KPIs are still essential for your business to analyze in order to reduce unnecessary fees and maximize your company’s financial standings.
1. Chargeback
A chargeback is the process of reversing a credit card payment. For example, when someone returns a product or claims a shipment never arrived, the customer can request a refund. This provides a layer of protection for customers because they will not be charged if the product is insufficient. Although for merchants, during the return or refund they are charged again for that credit card transaction, even though they are giving back the money.
An overabundance of chargebacks can be a costly expense for merchants, which means it is important to monitor the number of chargebacks and identify areas that can be improved in order to minimize these payment reversals. For example, are there ways you can reduce the number of refunds or provide proof of delivery? By improving these areas, it can quickly add up to generous savings.
2. Transaction Downgrades
Are you processing your credit card transactions at the right interchange level?
Depending on your type of business (B2B vs B2C) and your transaction needs, your business should to be processing your credit cards at the correct level. There are 3 levels (Level 1, Level 2, and Level 3) which coordinate to the different amount of information received during the transaction.
When there is more information about the card, it poses less risk for fraudulent activity therefore has a lower associated fee. Level 3 has the most amount of information and often is used for B2B transactions, while Level 1 has the least amount of information and is often used for B2C transactions, such as restaurants or retail where the card is present at the time of the transaction.
If your business is not collecting the proper information during a transaction or providing the necessary information while billing, it could be costing your business higher processing fees.
Click here to learn more about the importance of different B2B processing levels.
3. Proper Fee Estimation
Based on the previous KPIs, as well as other fee considerations, it is important to measure and prepare for your fee withdrawal. Your company needs to be aware of what percentage of your revenue should be allocated to fees to ensure your account is prepared for the withdrawal. By budgeting for fees, it provides a clear understanding of your profits so you can properly gauge your expenses and budget for the next month, quarter, or year.
4. PCI Compliance
Payment Card Industry (PCI) compliance is based on a set of industry guidelines to protect the security of credit card transactions among companies in the payment industry. The PCI compliance standards were implemented in order to safeguard private information that merchants have access to because of the transactions they process. These security standards help prevent data breaches, potential hacks, or fraudulent activity; therefore it is critical to ensure your company is in compliance each month to protect both your customers and your business.
Click here to learn more about why and how your company needs to be PCI compliant.
Tracking these merchant processing KPIs will provide your team with the information necessary to complete the tasks and meet your quarterly and annual rocks! Get in touch with Evolve Payment when determining your next goals and learn how our services can contribute to the achievement of your financial rocks!