Think about the favorite neighborhood you’ve ever been in. Chances are what made it your favorite was the local businesses. Independent businesses define our communities, and are the backbone of our economy. They are also a major source of growth for the credit card, and, more broadly, the financial services industry. Companies such as Visa, MasterCard, American Express, Discover, Chase, Bank of America, and Wells Fargo benefit hugely from an ecosystem where creative, artistic businesses thrive. The owners and employees of these independent businesses put a tremendous amount of effort into what they do. They add incredible value to their clients and to consumers. But they need an advocate in the credit card processing system to help them navigate the complexities. We at Gravity are committed to being that advocate.
We start by adding value anywhere we can. We are always looking for new ways to make electronic payments more seamless for independent businesses. One of the best examples of this is supporting process automation. Through Gravity Payments’ product development initiatives, we’ve experienced great success partnering with leading software companies to implement and support the best technology solutions for our clients. We take pride in the fact that these technology solutions greatly improve the daily lives of our clients and their employees. With repetitive tasks automated, the employees become more entrepreneurial and are able to focus on what matters most: their product, service or trade. In the case of a restaurant, the owner and her employees get to spend more time with their guests instead of painstakingly adding up receipts.
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In addition to automating repetitive tasks, we also provide data that allows artistic, independent businesses to do more for their customers. Our analytics platform transforms credit card processing data into actionable information. With this data, business owners are able to answer questions such as, “How much of my revenue comes from first time customers?” or “How far do my customers travel to get to my location?” This data can help businesses make more informed decisions regarding their products and services. This is just one more example of how we work hard to provide as much value as we possibly can.
Knowing your customers is important, but investing in your business is crucial to continued success. There are many ways to borrow money for your business. Bank loans are a common form of financing, but regulations can make this an expensive process for both the bank and the borrower, especially if the loan is less than $100,000. Oftentimes, it is more cost-effective to explore alternative financing options. Credit cards are a great example. With good credit history, strong income, assets, and a good credit card relationship, business owners can sometimes qualify for limits in the tens of thousands. But what happens when you need more money than your credit card can provide but less than a bank is willing to lend? Gravity identified this gap and created our working capital division. This division seeks to provide capital to qualified businesses above the credit card limit but below the threshold of bank financing. A great candidate for the working capital program is a well-qualified business that needs $50,000 for a new summer patio to attract more customers.
Because every penny counts for independent businesses, we want to save them as much money as we can. It is our goal to provide each product or service at the lowest possible price. Fortunately the loyalty among our clients has allowed us to grow Gravity primarily through word of mouth. By avoiding paid advertising, we are able to grow without passing on expensive marketing costs to our clients. Because our business clients stay with us longer, we are able to invest even further in their growth. When our CEO announced his plan to raise the wages of lower paid team members at Gravity, he said that he considered this increased payroll cost to be coming from our clients’ money. He wanted to make absolutely sure the change would generate a return on investment for our clients (to be clear, we didn’t raise prices, but our CEO made the point that another use for the money needed to increase the minimum wage at Gravity would have been to reduce prices to our clients). Since Gravity has a distant time horizon, we take every opportunity to invest in the long-term success of our clients. We could not be more thankful for the loyalty created by these lower rates. With more money in their businesses, our clients can use those funds to grow. This growth in turn benefits us.
In addition to constantly striving to provide the lowest cost possible, we also offer our clients options as to how they want to be charged. Our competitors have preset rate plans with names like, “Tiered pricing,” “Interchange-plus,” and “Cost-plus.” With new, more simplified solutions like Square and Stripe entering the market, more businesses are also now interested in having a flat rate with only one fee on each statement. We are proud to let our clients choose. Our competitors tend to think their pricing structures are the best and that those structures should be imposed on all of their clients. We believe that our clients should be given the flexibility to choose how they want their statement and fees to be presented.
Gravity has also taken cues from the large card brands in our industry, such as Visa, MasterCard, and American Express. These card brands always want more volume flowing through their platforms. To maximize acceptance, the card brands provide industry incentives to make it more affordable for certain types of businesses to accept cards. The card brands reduce the fees (interchange) for educational institutions, utilities, grocery stores other select industries. Gravity works with businesses and organizations in these industries to make sure they are aware of the incentives. To start, each business needs to be properly identified with the correct merchant category code. Gravity works with businesses to make sure they are listed under the right code. If a businesses is listed under the wrong code, fines and higher interchange can result. There are some situations where businesses overlap two merchant category codes. When this is the case (and neither category code is associated with a higher risk of fraudulent activity), Gravity works with the merchant to make sure they are in the correct category code. Moreover, we generally do site inspections to validate the business’ stated category code. For example, if a counter-service burger business without a liquor license is labeled as a hospitality drinking establishment, it would be easy to advise the restaurant to consider labeling themselves as a fast food establishment. There are also businesses whose primary product is beverage and food. In this case, there are two categories that work (5812 and 5813). The business should elect the category code that best suits their business. Lastly, the card brands and card-issuers, such as Bank of America, Chase, and Wells Fargo, offer price decreases for appending certain data to the transaction. There is a long-term client of Gravity Payments in the Seattle area that sells industrial equipment to state, local, and federal governments for use in government buildings. This business trusted Gravity to teach them to append valuable data to their transactions. The related interchange discount incentives saved this business more than $500,000 in less than a decade with Gravity.
At Gravity, we understand that accepting credit cards can be one of the most frustrating and costly endeavors for independent businesses. We exist to help reduce these costs and headaches. Let us know how we can help.