Choosing a Payment Processor for Seasonal Merchants

If you’re a seasonal merchant, you know that your business comes with unique challenges. You might have a few months out of the year when you’re incredibly busy, followed by months of downtime. Regarding payment processing, you need a solution that works with your business model and doesn’t cost you a fortune.

In this guide, we’ll go over what you need to know when choosing the best payment processor for your seasonal business.

The importance of choosing the right payment processor

Choosing the right payment processor is critical for any business, but it’s even more important for seasonal businesses. You need a solution that can handle your peak season but doesn’t cost you money when business is slow. Seasonal businesses may require payments during both slow and busy seasons without incurring additional fees for minimum processing amounts, contracts, or monthly fees.

Adrian Tamminga from Iron Embers says high fees during slow seasons and finding the right processor were the main challenges of finding a payment processor for his seasonal outdoor fire pit business.

“We searched for a processor with flexible contracts and pricing structures to accommodate our fluctuating income,” says Tamminga. And in the end, he explains they did end up switching “to a processor offering tailored features for seasonal businesses and exploring alternative payment methods to reduce costs during slow seasons.”

Like Tamminga, many businesses opt for payment methods such as ACH payments vs. credit cards which makes sense and offers lower processing fees.

Contract terms and fees to watch for

When choosing a payment processor, it’s essential to read the fine print carefully. Some payment processors charge minimum processing fees, setup fees, and admin fees for inactive accounts, which can quickly add up if you only process payments for a few months out of the year. Tamminga explains his company also got trapped into a contract because they didn’t read the fine print when determining how to choose their next payment provider.

"When we looked at moving to a different provider who better integrated with our [Enterprise resource planning] ERP system, we hit that wall. It’s not quite worth paying out the contract to move on either, so we’re just waiting it out for the next several years."

Choosing a pricing model that works for your business model

When it comes to finding the right payment provider, “the key to negotiating with payment providers is having a solid understanding of how credit card processing works,” explains Tamminga.

“A lot of providers, like Stripe, charge a flat fee, but the actual cost of accepting credit cards, called interchange fees, varies a lot from card to card. Usually, these flat rates range between 2.9 – 3.5%. Their flat rate is well above these fluctuating charges, though, so you could save up to a full percentage point by switching to a variable cost.”

“Don’t forget about volume-based discounts as well,” Tamminga continues, “if you’re using a flat fee provider and doing over $50,000 a month in credit card charges, you should definitely reach out and ask for a quote for an ‘interchange plus’ billing arrangement.”

Tamminga shares some of the other tips he’s learned when shopping around for the best processing rates.

• Reach out to multiple providers and ask for formal quotes and rate comparisons
• Be careful of contracts
• Watch out for monthly fees

Some payment processors require you to process a certain amount of transactions each month, or you’ll face fees. This can be a problem for seasonal businesses that have downtime throughout the year. When looking for the right payment processor, be alert for minimum processing requirements or penalties for low volume.

“To make sure you get the best rate, reach out to a few other providers for quotes as well. With a couple of quotes, you can go back to your current provider and ask them to beat the competitor’s pricing, or you’ll move to them.”

“Don’t be too afraid to go for a good deal, though – you could be saving thousands of dollars each month by taking control of your processing fees.”

Tips for seasonal businesses to manage costs all year round

Whether you’re a Winter or Spring business, here are a few tips for seasonal businesses that you can check off your to-do list:

• Notify your payment processor that you are going to be processing payments again so they can expect “unusual” activity.
• Don’t neglect social media during your off-season, and use it to communicate your grand opening and all the activities that go into preparing for peak season, create product hype, and even reach online customers through social commerce.
• Get on top of your inventory for the season, and manage your inefficiencies with inventory management software to track your inventory across multiple locations. Don’t forget to use sales insights from your previous season to inform your stock ordering to double up on your best sellers ahead of time.
• Do some spring cleaning and ditch your expired or old data to make sure you are PCI-compliant and organized.

Winter, spring, summer, or fall: Ready to handle it all

Choosing the right payment processor for your seasonal business is essential. You need a solution that can handle your peak season without costing you a fortune during the slow months. By reading the fine print and choosing a payment processor that fits your business model, you can save money and streamline your payment processing. Look for a payment processor that doesn’t charge monthly fees, setup fees, or minimum processing fees and doesn’t have penalties for low volume. With the right payment processor, you can focus on growing your business and serving your customers.