Unlocking the Merchant Services Opportunity: A Guide for Franchisees
For Schooley Mitchell franchisees, merchant services represent one of the most lucrative and high-demand categories for expense reduction. The payment processing industry is a “Wild West” characterized by a lack of transparency, where 94% of businesses accept card payments but rarely understand their billing structures. By analyzing these complex rate structures, we provide essential clarity to organizations that are often overpaying due to outdated agreements and inefficient processing methods.
Key Findings
- Studies show that tens of trillions of dollars in card payments were processed in 2023 and that number continues to increase. Additionally, online sales were five times higher in 2024 than in 2019, highlighting both the shift in consumer spending habits and the rapid changes in the merchant services industry, underscoring the need for businesses to respond to their customers accordingly.
- High Adoption Rates: Approximately 94% of organizations now accept credit or debit cards, making almost every organization a potential client.
- Interchange Fee Reductions: Recent government measures aim to reduce interchange fees for small businesses; yet many remain on old, expensive structures without intervention.
- The “Wild West” Reality: The industry lacks standardized regulations on billing, leading to non-transparent fee structures that businesses find impossible to audit themselves.
- Incorrect Acceptance Methods: Fees vary wildly depending on whether a card is swiped, keyed in, or taken over the phone, yet many businesses inadvertently use the most expensive methods.
The Complexity of Merchant Services
The payment processing industry is notoriously confusing. Unlike utilities or telecommunications, which have some level of oversight, merchant services operate with over 700 rates. Vendors often use “teaser rates” that escalate over time or hide “junk fees” deep within monthly statements. For Schooley Mitchell, the value lies in being independent experts who can decode these statements and identify where the vendor is taking advantage of the client’s lack of expertise.
The Interchange Maze: Swiped vs. Keyed
A major source of overspending is the “Interchange” rate. This is the base fee paid to card-issuing banks, and it changes based on the level of risk:
- Swiped/Chipped: Generally the lowest rate because the card is physically present.
- Keyed/Phone/Internet: These are “Card Not Present” transactions, which carry higher risk and significantly higher fees. Many businesses inadvertently process transactions in ways that trigger these higher rates—for example, by manually typing in a card number when a terminal is acting up—without realizing it is costing them significantly if it becomes a pattern.
The Franchisee Opportunity: Optimization & Negotiation
As a franchisee, you don’t just “change vendors.” In fact, 80% of our clients save money with their current vendor by:
- Optimizing the Environment: Ensuring the business uses the correct technology, processes, and security protocols (like PCI compliance) to qualify for lower rates.
- Negotiating Rate Structures: Moving clients from “Tiered Pricing” (which is often expensive and unclear) to “Interchange Plus” pricing.
- Auditing for Errors: Merchant statements are frequently riddled with incorrect fees that businesses simply pay because they don’t know any better.
While the details above outline the complexity of merchant services—from interchange rates to PCI compliance to the complex nature of the industry—it’s important to emphasize that you don’t need to become a payments expert.
Our corporate analysts are the specialists who handle the technical heavy lifting: decoding statements, benchmarking rates, negotiating with processors, and ensuring compliance. Your role as a franchisee is to understand why merchant services matter and to confidently communicate the value we provide. Every business that accepts card payments is overpaying in some way—whether through outdated contracts, incorrect transaction methods, or hidden junk fees. By partnering with Schooley Mitchell, clients gain access to independent experts who bring transparency to an intentionally complex industry, saving them 15-18% on average while freeing them from the burden of navigating an expense category that was designed to confuse. That’s the value proposition, and that’s why merchant services remains one of our most impactful offerings for clients across North America.