Over the years, independent gyms and their counterparts like training studios and bootcamps, have been moving from cash transactions to online payments. This is done through a system called payment processing. A payment processor is a company used to handle credit/debit card transactions through a payment gateway which in turn sends a transaction request to your bank and/or an Automated Clearing House (ACH) provider.
When a gym membership is being purchased via a credit card terminal, the information is sent to a system that stores the account details of your customer in order to verify if the customer has sufficient funds to process the transaction. After sufficient funds have been verified, the payment processor then sends the authorization files from a company like Visa or MasterCard and then gives it to the merchant account providers. In short, a payment processing company is the one that handles Visa and MasterCard payments.
It is essential that independent gyms should use this method of payment as it is more accurate and easier to handle mass amount of transactions. The same can be said for training studios and bootcamps depending on the number of clients they have. Regardless gyms, training studios and bootcamps should avail themselves to this process in order for them to remain competitive with the larger gym chains in the fitness industry.
Preparing for Small Gym Management
Once a fitness business opens their doors, they will begin to experience growing pains. This can be both an exciting and overwhelming time in your business. However, if you are not adequately prepared, there is a possibility that irrecoverable damage can occur. There is a great article written by a guest contributor on Insight’s Gym Business Blog that talks about his gym’s growing pains experience, what they learned from it and how they recovered. The article is titled “Small Gym Management: From Pen and Paper to Nightmare to Software.” If you have a moment, check it out because it gives a realistic account of what most new gyms go through.
So, you may now be asking, isn’t having a payment processing system in place enough to prepare fitness business for growing pains? I hope to answer this question below, but I first want to touch on the fundamental differences between a payment processing system and a gym management system.
Difference between Payment Processing Companies & Gym Management Systems
Gym management systems are different from payment processing companies in many ways. The first difference is that document management companies is a records or archival company that stores and organizes their clients’ private data and information. The information that is given to a gym management software system is secured and cannot be accessed by third parties.
Payment processing companies only have access to the merchant accounts. Through Visa or MasterCard the merchant account will be debited with the amount the gym customer has paid for a membership.
Gym management software is designed to organize and store data in order to make it easier for a client of theirs to request for information. Structured query language (SQL) is used to analyze the request made by a client. For example, if the client makes a query for all the names beginning with the letter ‘S’ under the age of ’25’, the gym management software will extract all the information in the database with regard to that query. Compared to payment processor systems, they store the account details of the merchant. When a transaction is made, it either debits or credits the amount to the merchant account which either increases or decreases the customer’s balance respectively.
Solution: Payment Processing System & Gym Management Software Working Together
Fitness businesses have a certain amount of members in their establishment. These members in turn acquire the business services for either a fixed fee or a monthly fee. Gym management software can store the member’s information and their respective account balances with the merchant. The payment processing system and gym management software can work in tandem to make these transactions easier for the fitness business owner.
The members’ balances which are stored in the management software can be used by the payment processing system to verify if there are any outstanding amounts that require attention. Additionally the fitness business can then keep track of the payments that are being made and the payments that are due from their members easily and accurately.
It is important for fitness businesses to use these systems jointly instead of manually tracking their customers’ payments as it will save on time as well as money. To adequately prepare for your business growing pains, I do highly advise having both a payment processing system/merchant account and gym management software system in place. Having these systems a few months ahead of time of your projected growth will be beneficial as it will be less expensive compared to the manual labor that it will cost you or your staff to manage your member accounts via a book or register. Additionally a gym management system is a secured system which will give you greater confidence and peace of mind in the accuracy of your member accounts.
Gym Management Systems: Full Service Providers verses Software Providers
If you run into this article while you are on the hunt of either a payment processor system or a gym management system, you may have one more lingering question…
Aren’t there gym management systems that also have a merchant services component too?
The answer is, yes.
Essentially in the fitness industry there are two types of gym management companies: full service providers (the traditional model) and software providers (like Insight). Full service providers bill members on your behalf and then transfer the money that they’ve collected to your bank account after subtracting their fees. Full service providers also deal directly with your members for member issues (such as cancellations and billing problems). For their part, most full service billing companies will charge you not only monthly fees, but they will also take a percentage of all payments you collect.
On the other hand, a gym software, like Insight, provides the software for you to successfully manage and bill your members. Although Insight can integrate with your bank and ACH providers to streamline the automatic collection of payments, Insight never comes in contact with your member fees or your money in any way. In turn, Insight requests only a simple flat fee from you each month for this service. Because Insight does not access to your member funds, the Insight company is dependent on you pay for the monthly fee. Furthermore, Insight does not interact directly with your members. A software provider like Insight will tell you everything you need to know about your members, billing issues, birthdays, credit card expiration dates and the like. Therefore, when an adjustment or cancellation needs to happen, your members will call you directly.
As an analogy to sum this up, a “full service” provider would be an accounting firm and “software provider” would be the Quickbooks computer program.
Topics for Discussion:
I hope this posts is helpful. If you have any questions about payment processing, gym management systems, or want to provide additional information , I welcome feedback in the comments below.