Recently, Marty Milstead, MADA president, interviewed Amberly Allen, founder and managing partner of Dealer Merchant Services (DMS). DMS is an Endorsed Partner of MADA that focuses on maximizing a dealership’s profitability with the largest, and oftentimes, overlooked expenses and credit card processing fees. DMS uses a unique and proprietary method, backed by a U.S. patent, to help dealers recoup an estimated $5-15k per month, per rooftop, without jeopardizing CSI and is the fastest-growing merchant provider that focuses solely on dealers.
The following are excerpts from the conversation.
What is the focus of DMS?
We help dealers pass along their credit card fees to their customers, but we do that within the confines of compliance and legal regulations. If dealers choose not to pass along those credit card fees, we want to make sure that they aren’t paying too much with their current provider. It’s a complex topic, so we want to always be a resource to dealers to make sure they’re doing it the right way.
There is some hesitance from dealers because they might get kickback from their customers. How do you deal with that?
DMS has an extensive training process. We train all of our dealers with what we call the “Dealer Merchant Services University.” That’s our training platform to make sure that dealers have the right word tracking and that they’re communicating the right way — upfront and often — with their customers. We do both online and onsite training. That one-two punch has really helped our dealers make sure they don’t have any CSI issues.
Why can’t dealers just say, “Okay, use your debit card with no charge or pay cash with no charge. But use your MasterCard, American Express, Visa, whatever, and we’re going to add a 3% charge.” What’s the problem with that?
A dealer can’t do that because it’s not legal. They have to use technology that knows the difference between a credit card and a debit card. The technology we use reads the first eight digits of the customer’s card and knows that it’s debit, even if they don’t have their PIN code, and a surcharge won’t be added.
We’re seeing audits coming — just making sure dealers aren’t charging on debit cards. Additionally, there are over 400 different interchange rates, and a dealer is not allowed to profit from the additional surcharge. They have to have a third party like us that charges them one flat rate for all cards. That ensures that they’re in compliance, they’re not profiting, and they’re fully legal with the program.
What savings can dealers expect?
A good rule of thumb is for every $10,000 spent, dealers can save $7,000 a month, $84,000 a year and just over a quarter million of net profit savings every three years. The dealers that we are working with have increased their bottom line significantly. Our total dealer body savings is about $45 million program to date. We track those savings for the dealer, so they know how much they’re saving. They, in turn, can use that money in other places.
How is DMS compensated?
As I mentioned, there are over 400 different interchange rates. If a rate on one card is 2.75% and we charge the customer 3%, we take that small amount of the spread after all the technology and network fees have been paid. In some instances, like American Express, they’re oftentimes higher than 3%, so we take a hit on those, and then we take a gain on others. For us, it’s the long game. We take the risk on whatever the card brand usage is, and we take that small percentage of the difference.
DMS is a great partner for MADA and a great resource for our dealers, and you’re really good at what you do. What else do you want to add to that list of dealers looking for a surcharge partner?
The thing we are most proud of is that we’re automotive-specific and surcharge-specific. At the end of the day, making sure that dealers work with a partner that understands the complexity of automotive is really important because we don’t want a dealer to do this wrong and have it go bad for the rest of us.
To learn more, watch the full interview below or on YouTube.
