The Landscape of Payment Processing
If you've ever felt like navigating the world of payment processing is unnecessarily complicated, you're not alone. There are numerous moving parts, and many payment processing companies claim to make it easy for you to accept card payments. But beneath the surface, these providers operate under very different models, each with varying pricing models, transaction fees, onboarding processes, and risk factors.
You've likely heard terms such as Merchant Services Provider (MSP), Independent Sales Organization (ISO), Third Party Payment Processor (also known as a payment aggregator or Payfac), and Payment Services Provider (PSP). These labels are often used interchangeably in the market, which only adds to the confusion. But they don't all work the same way.
For multi-rooftop dealerships that accept credit card payments across multiple locations or departments, finding a simple, secure, and flexible option is crucial. In this article, we'll break down the key differences between payment processing models and their impact on dealership operations. You'll get a clear comparison, learn what to look for in a provider, and gain the insight you need to make an informed, scalable decision for your dealership group.
Considerations When Choosing a Provider
For auto dealerships, choosing a payment partner isn't just about accepting cards. It's about streamlining payments across departments and rooftops while maintaining high profit margins and customer satisfaction. Here's what to prioritize:
Cost Saving Tools
Protecting your bottom line with methods like surcharging are extremely effective but need to be implemented by an expert who understands the nuances of surcharging. Look for technology built to simplify compliance and a partner that provides support for everything from signage to employee training.
Security and Compliance
Dealerships handle a lot of sensitive data. Demand PCI-compliant payment processing services, including tokenization, EMV support, and ACH account verification. Bonus: If your provider operates its own PCI Level 1 gateway, it eliminates the middleman and reduces costs.
Integrated Workflows
Whether you use a DMS, CRM, or service management platform, ensure that your payment provider minimizes manual entry and streamlines backend operations by integrating into the browser-based management software you already use.
Omnichannel Capabilities
Your dealership likely accepts payments in various locations, including the showroom, service lane and parts department, by multiple means, including over the phone, online, and by invoice. Choose a provider that can handle it all (cards, ACH, digital wallets, recurring payments, and text to pay) without needing to juggle multiple systems or adding unnecessary complexity to reporting and reconciliation.
Transparent Pricing
With high-ticket sales and transaction volume, effective cost control is crucial. Look for clear, itemized pricing and avoid contracts with hidden fees, PCI penalties, or long-term lock-ins. Read the fine print regarding setup fees, monthly fees, and early termination fees.
Live Support
When something goes wrong (especially during a high-ticket transaction or end-of-day reconciliation) you need real help, fast. Look for providers that offer real-time, U.S. based customer service with fast response times, so you're never stuck in a loop of long hold times, chatbots, and endless escalations.
Players Involved in a Dealership’s Payment Transaction Lifecycle
Before diving deeper into provider models, it's helpful to understand the key players behind every transaction. Whether it's a customer placing a deposit on a new vehicle, paying for a service ticket, or picking up parts, every transaction flows through a sophisticated pipeline of participants, each working to ensure that payments are a secure and seamless experience.
Here's a high-level look at the players involved in many dealership payments:
- Cardholder: Your customer initiates the payment using a credit or debit card, or an ACH bank transfer.
- Merchant: Your dealership accepts the payment in exchange for goods or services.
- Payment Gateway: This technology securely captures and encrypts the card data, then routes it for authorization (used for in-person payments, online payments, and mobile payments).
- Payment Processor: This credit card processor transmits data to the appropriate networks and returns an approval or decline response in real-time.
- Acquiring Bank (Acquirer): The financial institution that issues your merchant account and deposits funds to your dealership's bank account.
- Issuing Bank (Issuer): The customer's bank that approves or declines the transaction.
- Card Brands: The networks (Visa, Mastercard, Amex, and Discover) that facilitate communication and ensure standards across issuers and acquirers.
- Payment Facilitators (Payfacs): Third-party processors that represent the merchant of record and board sub-merchants under their umbrella account.
- MSPs/ISOs: Intermediary payment providers that work with acquirers to offer individual merchant accounts, typically paired with payment terminals, software, and support services.
All these players work together behind the scenes to seamlessly process transactions in seconds.
The Different Types of Payment Providers
As you research payment solutions for your dealership, you'll encounter a range of providers that process payments, some calling themselves Merchant Services Providers (MSPs), others using terms like Third Party Payment Processors, Payfacs, or Payment Service Providers (PSPs). The terms can be confusing, and many credit card processing companies operate under multiple models. Let's take a closer look at what these titles mean.
Merchant Services Provider (MSP)
MSPs provide a dedicated merchant account for processing credit card payments under your business's name, which is ideal for dealerships managing complex operations across rooftops. While onboarding may require a formal application, the benefits include multiple payment options, better control over how payments are processed, and a lower risk of having funds frozen.
MSPs often offer advanced features that dealerships rely on, like surcharging for credit card purchases, multi-location reporting, and secure payment acceptance across departments.
Third Party Payment Processor (or Payfac)
Payfacs enable fast setup by allowing dealerships to board as sub-merchants under a shared account. While the speed is convenient for processing credit and debit card payments, especially for new or single-rooftop operations, dealerships may face certain limitations. The Payfac can hold your funds due to automated suspicious activity and risk reviews, and pricing tends to be flat and higher, making it less ideal for high-ticket sales or long-term growth.
Additionally, some Payfacs do not natively support surcharging, resulting in dealerships missing out on significant savings.
Payment Services Provider (PSP)
A PSP merges technology and processing into one flexible solution. Some, like PayJunction, operate as MSPs with their own PCI Level 1 gateway, enabling auto groups to streamline payment acceptance across Sales, Service, and Parts without relying on or paying third-party vendors.
This flexibility enables your team to centralize payment activities across rooftops, integrate with existing systems, and scale seamlessly as your dealership group expands.
Quick Reference Chart: Provider Types
PayJunction: A Full-Service Payment Services Provider Built for Dealerships
PayJunction's technology scales with modern auto groups. We provide a unified platform that supports your Sales, Service, and Parts departments whether you're a single rooftop or a multi-location dealer group representing multiple brands.
Dedicated Merchant Accounts
Each dealership location receives an individual merchant account, providing complete visibility into rates and funding timelines, helping you manage cash flow and reduce risk.
Unified Gateway and Processing Platform
Accept card, ACH, and contactless payments across all departments and rooftops. Everything runs on one platform with no third-party gateway required. Robust reporting enables managers and decision makers to gain visibility into all customer and transaction details, by department, location, or brand.
No-code Payments Integration®
If your team uses a cloud-based software, such as a DMS, CRM, or repair order system, our browser-based extension enables you to sync payment data directly into the system you use to run your dealership.
Transparent Pricing & Compliant Surcharging
Our SmartSurcharge program helps auto groups offset credit card transaction fees while complying with card-brand rules and state laws. It's a win-win for profitability and compliance.
Award-Winning Support
Our U.S. based team is available by phone, email, and online chat. Knowledgeable agents will answer your call in under a minute on average.
Choosing the Right Payment Processor for Your Dealership
Not all payment providers are created equal, especially when it comes to dealership needs. Understanding the differences between a third party payment processor and a merchant services provider can help you choose a partner that scales with your operations.
At PayJunction, we're committed to helping you streamline payments across all your rooftops, eliminate unnecessary costs, and protect your reputation with secure, ethical, and efficient payment solutions.
