The pristine waters and luxurious beaches of Hawaii are an indulgent escape for millions of travelers in search of an exotic getaway from the mainland – and the mainstream. But, that same seclusion that attracts tourists can also be a barrier to Hawaii residents and businesses when it comes to keeping up with the latest trends.

Watching the Groupon and LivingSocial group-buying frenzy unfold on the mainland, serial entrepreneur Jon Sugihara aimed to bring the same opportunity to the island residents with PLAYHawaii, a group-buying daily deal site for residents and visitors.

“Hawaii consistently lags the mainland by six to twelve months, especially when it comes to web trends,” Sugihara said. “When we launched PLAYHawaii in the summer of 2009, we knew we’d be the first and that no one else would enter the market for at least another 10 months. We got an early start, built a good following and were profitable from Day 1.”

Despite his previous startup experience, Sugihara faced a new challenge with this venture: finding a credit card processor. Because PLAYHawaii essentially sells discounted gift certificates, most payment processors were hesitant to work with him. Gift certificates carry a higher risk of chargebacks and the lack of a tangible product makes it too risky for most of the big-name processors. Sugihara searched online and found some options, but few peer reviews.

After finally settling on one that “looked legitimate,” he moved to renegotiate their fees once the site started gaining volume, hoping to get a better deal. “Besides salaries, our credit card fees were our second highest expense,” Sugihara said. “Our margins are based on a fraction of our selling price, and we incur the cost of the credit card processing in our commission. Saving money on the fees to move that needle is very important when your margins are as tight as ours.”

Am I Really Getting the Best Deal?

Shortly afterward renegotiating, he read an article about FeeFighters, the only online comparison shopping portal that lets businesses compare credit card processing offers from top-tier processors to find the best deal. Sugihara decided to try it out.

FeeFighters’ free online comparison engine lets business owners enter some basic information about size and scope of their processing needs (number of transactions, average size, etc.) and instantly get bids from top-tier processors for apples-to-apples comparison. Unlike lead generation sites, merchant information is kept confidential and shared only when a business owner selects a processor.

After entering a few details about PLAYHawaii, Sugihara was able to view a head-to-head comparison of offers from processors that could meet the unique parameters of PLAYHawaii. “I was really just curious to see how our new fee structure compared to what others were offering. What I found is that the rates on FeeFighters were about 30 percent lower than what we were paying, even on the new contract,” he said. “That’s a pretty significant savings that goes directly to our bottom line.”

Having just renegotiated with his current provider, he was reluctant to approach them again. Besides, their fee structure was still quite complicated, leaving it unclear as to what the final bill would be each month. “It’s a nightmare to read the statement. You just have to take it at face value, and hope that it’s right,” he said.
Based on what he saw at FeeFighters, Sugihara started a conversation with the provider that floated to the top in the FeeFighters comparison. He verified that the fees were accurate, that there were no hidden fees and no other surprises. This particular processor was already working with other similar types of businesses, so he knew the gift certificate model wouldn’t be a problem. More important, Sugihara wanted to be able to get in touch with someone when needed, and not just on the sales side, but the support side as well. Most businesses have few interactions with their processor—unless it’s an emergency, and then you need them to be there to help more than ever.

Making the Switch

Once he was sure it was a good deal, Sugihara cancelled his contract with the previous provider. Unlike many other businesses, he was able to do so without an exorbitant termination fee and other “catches” that are often buried in the fine print. Despite the fact that he’d been paying more than he should, Sugihara was fortunate that he was able to terminate the contract and switch to a new provider with little trouble. “Most businesses are not so fortunate,” said Stella Fayman, marketing ninja at FeeFighters. “We see many small business owners get ripped off by credit card processing companies and their one-sided contracts with tons of fine print and hidden fees. FeeFighters is here precisely for this reason—to bring some transparency to the process of finding a credit card processor you can trust with fees you can afford.”

Participating FeeFighters processors have all been vetted and must adhere to strict rules for transparent pricing and contract clarity to ensure business owners won’t be taken advantage of or sideswiped by hidden costs. The site works off a model similar to that of the Priceline or Expedia travel sites, and is just as fast and easy to use.

What Have You Got to Lose?

Having switched to a new provider based on his search through FeeFighters, Sugihara says the company has not only cut its credit card processing expenses by one-third—savings that go directly to increasing the company’s profit margin—but has also had a somewhat better experience in handling cards issued by a specific local bank. For some reason, the bank had been consistently rejecting cards run through PLAYHawaii, but that rate has decreased since the switch. Sugihara believes that, beyond providing an easy-to-use, free service that he wholeheartedly recommends to any business owner, FeeFighters will help to build competition in the marketplace and help bring overall clarity to a traditionally murky business model. “A lot of processors seem to operate on random terms, baseline percentages and overcharge for everything because they know business owners simply don’t have time to delve into the fine print,” he said. “FeeFighters has done the due diligence to compare apples-to-apples based on similar fee structures and identify processors that would be a good fit.”

“I would recommend any business owner at least try FeeFighters. Why wouldn’t you want to find out if you could reduce your rates?”

Image thanks to Joe Phillipson