Payments for Parts – Are there more options?
We’re excited to feature Dealer Pay as a guest educator on our blog! To learn more about Dealer Pay, click here. Enjoy!
Dealerships have been selling and wholesaling parts for decades to consumers and businesses all over the world. Whether these are one-time purchases or regular/repeat purchases, there are only 3 ways these parts are attained: the customer picks them up, the dealer delivers them, or the dealer ships them. The objective in all of these scenarios would be to make this process quick and simple for their customer along with getting paid in full/on time.
Let’s break this down and review all the payment options available, customer convenience, and any potential risks associated.
Customer pick up
This is an easy one, assuming your dealership has the staff to manage these orders and collect payment in person. A simple exchange of cash, check, or card is the most obvious.
Cash is cash, smile and make the change. For card processing, using an encrypted payments device: swipe, chip, or tap and DONE. However, check acceptance requires a bank deposit, (either manually or electronically). In some scenarios, these checks bounce or are returned for insufficient funds, closed accounts, or even worse, stop payment. Whether it was an accident or on purpose, this does require some action toward collection. Otherwise known as a GIANT PAIN IN THE BUTT. Hopefully, in most cases, your customers make good, but in other cases, this could be a loss. What can your dealership do? Either stop accepting checks or use a check guarantee company to insure them. Though this is an added expense, it might make sense to avoid future losses.
Payment in person, for the most part, seems straightforward, but is it the most convenient option for your customers?
Next, let’s review the concept of Dealer delivery!
Just like a pickup, all orders take place ahead of time by phone or online. This is a great time to also collect payment! That’s right! Get paid before you deliver and get that card payment processed! Stay PCI compliant and don’t write the numbers down or store them ANYWHERE. With the customer on the phone, confirm the delivery address and payment amount. Next, type or punch the card numbers directly into your payment device or virtual terminal. Assuming the transaction is approved, you are good to go. There are options to also take checks by phone if you have a check processing provider for ACH or Check 21. If so, the same rules apply but, in this case, you would be key entering a routing and account number likely along with obtaining a driver’s license number or business phone number as well. These processes are still somewhat cumbersome with high-volume operations. What if you could send a payment request by text or email to the customer to capture a card or check for payment? That is a splendid option because you are technically paid before you leave for delivery. Not only is it fast and easy, but it is also convenient for your customer.
Now, if upfront payment is not an option using a card or check, you will need to collect that payment upon delivery. This is where it gets tricky. If they give you a card, you will feel compelled to either write down the number (DON’T DO IT), call it into a colleague at the dealership or your processing provider, if that is an option. For checks, this could be trickier, you may have to simply take the paper and cross your fingers. Again, some check processors have the ability for you to pre-authorize the check, but for dealers with larger delivery operations this could cause delays…unless you have newer technology and mobile options for payment acceptance. MOBILE! These options are in the form of a mobile app/device or online. Most of these solutions are great to accept a card payment and if using a device, cheaper than key-entering it. Wow, wouldn’t it be great if you could also use a mobile device to image a check for processing? You bet and the technology is available. (Dealer Pay plug).
I must say, getting your parts delivered by a driver is convenient and effective, but it may not be an option for all your customers based on logistics, etc.
Let’s start shipping!
Just like delivery, the best method is to get paid upfront. However, with shipping, there are a few more areas of risk worth mentioning. For example, the address here is key. When taking the payment, again, either by phone or online, you should also validate the address for a few reasons. Your processor should be validating the address that you enter or that your customer enters online to make sure it matches the records of the issuing bank. If it does not match, there is likely a fraudulent situation at play. The next reason the address is important, is you want to avoid at all costs, shipping parts to an address with a different billing address. This also screams chargebacks/disputes and attempted fraud. Even if this order is done online or with a 3rd party, your likelihood of loss is much higher.
All of this talk of risk and fraud is depressing but realistic. Let’s see how this would change using modern payment methods to apply here in all three of these scenarios.
If your payment provider is DMS integrated or has a sophisticated point-of-sale solution, you may have even more payment options, making the process efficient and the parts department more productive.
We have already discussed sending hosted links or payment requests by text or email, mobile, and imaging, but what if your customer elected to have you store a card or check for future use? Many parts customers are repeat buyers or business-to-business. If you were to securely store their payment information in a Safe vault, using a token, you can simply apply payment when it is due. This can be in the form of a card or ACH token, stored and identified by your customer or business name. ]This avoids fraud, data collection, inconvenient phone calls and more. Plus, these stored records can also stay updated with an Account Updater service so that you don’t have to worry about expired/closed cards. If you have multiple stores, you would be able to access the Safe vault, across all locations, to maximize your options and keep the accounting in line by store. All these options are 100% PCI compliant.
About the author, Julie R. Douglas: As an experienced enterprise sales professional, I strive daily to attract, build and maintain long-term and quality business relationships. I have an assertive yet honest approach to sales and business practices and rely on references and referrals to generate new sales. My greatest reward is being a happy and long-term customer. I provide solutions for payment acceptance, with a focus on advanced technology and security, mobile and virtual payments, customer loyalty/rewards, real-time reporting, and much more! My goals are to provide the automotive/retail industries, with increased sales and profits, improved customer loyalty, great security, technology, and support.
