It’s no mystery that TCM is on a mission to offer the lowest cost payment processing. It’s been written about many times and many customers have benefited from the low cost credit card processing. The questions we get frequently is how do you do it and why don’t other payment processors do it?
Let's start with why
A great company always starts with “why”. Check out Simon Sinek’s Ted Talk about companies that start with why. This explains a little on how we think in terms of being a mission-based business.
We want business managers and entrepreneurs to be successful and achieve their dreams. These entrepreneurs and businesses are the lifeblood of our economy. We want to support them.
Most businesses fail due to a lack of cashflow, so we are here to help with that. We believe no business should be paying 3% to 6% of all their hard-earned sales to credit card companies. We want to drive that payment processing price down and eventually to zero.
How we get low cost payment processing
The answer to why we can undercut any other payment processor in the market is not due to one thing. It’s due to a collection of things. Other payment processors could do this too; they just don’t. How we do it is based on things such as the partners we choose, how we set up our cost structure, how we define our success factors, and how we maintain our culture.
As a side note, to understand how money flows in payment processing, you may want to review the payment processing industry overview for background information.
Our partner setup was the first thing we implemented to allow us to offer cheap payment processing. Many backend acquirers will have heavy fixed costs forcing payment processors like TCM to have high prices. We went to a completely variable model where we have minimal fixed costs. Our partner setup also includes having great providers of payment terminal hardware, software systems, and general payment systems. We always require that our partners have the ability to get close to wholesale cost with no unnecessary markup.
TCM set up its cost structure to remove any fat. No expensive offices, no exorbitant salaries, and no marketing cost (only word of mouth). There are hundreds of line items that we removed. We pass all these savings to businesses. There are many luxuries we are saying no to, but that’s helping us grow and provide a great service to customers.
As a culture, we are set up to be frugal like any savvy business owner should be. The more frugal you are, the better you are as an employee at TCM. The more you can do with less, the better you are. That’s our culture. We define success based on how much we save merchants, how long customers stay with us, and how many customers refer other customers to us. It’s crazy to think that the payment processing industry has 20% to 30% churn per year. That’s what we’re changing.
When you put all these things together, yes we make less money per customer. However, customers don’t leave TCM and they refer new customers. Therefore, the lifetime value of our customers is high. It’s a great business model to offer low-cost payment processing.
