Paypal is an amazing company. They have pretty much turned payments made on the internet into an art form, leaving no competitor in their path. Their money market account pays better than almost any other financial institution’s and they make receiving and sending money just as easy.
I receive quite a lot of my monthly cash through paypal, so I have just always had a debit card so that I could treat it just like a normal bank account. There is something terribly rewarding about going to the MAC machine and pulling out money that almost magically shows up. I didn’t sell anything for it, and sometimes I didn’t do any work for it, it is just web advertising and things like that.Anyway, the Paypal debit card gives you 1% cash back on all purchases when you use it as a credit card. It’s real nice especially for office supplies and gas, which are always a pain in the ass and can get real expensive. But I always wondered why it wasn’t just a 6 month promotion, the way other credit cards work it.
Driving home from an all night party, it suddenly dawned on me why they always give 1% back. It’s because they make 3% on each and every transaction that you swipe your card for! Visa, Mastercard, American Express - they all charge the merchants 3%! So if you go and buy $100 worth of groceries, Walmart only sees $97 for that transaction. The other $3 goes to Paypal. (And your 1% is paid to you from that…)
You see, Paypal encourages you to use their debit card to shop, so that they can make their 3%. Then, they give you 1%, keeping 2% for themselves. It truly is genious.
In your business, is it possible to do something similar? Can you offer an ongoing promotion that allows you to make more money, by giving your customers some of it? The web publishing business is full of promotions like this. Think Commission Junction and LinkShare. Even Google is getting into this ‘referral’ game.
But take the mom and pop hardware store. How about offering your customers free in-house financing for 60 days with a 19.9% interest rate thereafter? I bet they will spend more initially, and you could make some good money on the payments! Not only that, but if you get into trouble, you can sell those receivables to the bank for cash right now…
Apply for a 3.75% Checking Account!
