merchant services

Long-Form RFP and Scheme Negotiations

Project Overview

Co-operative Supermarkets Australia Limited (CSA) is an incorporated co-operative formed in late 2019 whose members operate independent supermarket and convenience stores. CSA has authorisation to collectively bargain with suppliers of goods and services to the Australian grocery industry.

CSA has 4 purposes:

  • To provide a better assortment of products.
  • To lower the cost of goods of directs and promote more direct lines.
  • To lower the cost of doing business.
  • To share best practice to make the operation of our supermarkets more efficient.

CSA members operate over 330 stores.

Project Background

CSA sought to go to market with a Request for Proposal (RFP) to negotiate a group merchant services pricing deal with the objective of achieving significant fee savings for its members.

Payments Consulting Network (PCN) was engaged to: develop the Merchant Services RFP materials; compile payments volumes and fee data provided by members; manage the RFP process; support the evaluation of RFP responses; conduct pricing negotiations with RFP respondents; conduct strategic merchant rate negotiations with the card schemes; develop a fee savings calculator and reporting tool; support CSA with contract negotiations; support CSA members with queries on the fee savings comparison; and make recommendations to the CSA Board.

Throughout the RFP process and card scheme negotiations, PCN reported on a weekly basis to a Working Group comprised of the CSA commercial manager and chief financial officers and directors of two of CSA’s larger members. PCN also presented monthly updates to the CSA Board, which comprised owners of the major supermarket groups within the membership base, and conducted Q&A sessions on the project at regular state based ‘town hall’ video meetings held with CSA members.

Project Outcomes

Through the RFP process and card scheme negotiations, PCN achieved the following outcomes:

  • Greater than $3 million per annum (25%) aggregate projected fee savings for CSA and CSA members. This resulted from implementing least-cost- routing of eligible multi-network debit card transactions, negotiating improved strategic merchant rates with the card schemes, and reducing merchant services provider margins.
  • Developed a flexible framework to enable CSA to sign-up members in new industry categories and achieve fee savings for every single CSA member regardless of their individual card mix, transaction volumes and annual sales.
  • Provided CSA with an industry leading group pricing deal that CSA are leveraging to sign up new members. As an example, during the 5-month project, PCN supported CSA in signing up two large supermarket groups that expanded member store numbers by 25%. This represented double the CSA new member store target for the year. These two groups joined CSA specifically to access the new merchant services pricing arrangements.
  • Established strategic partnership agreements with the card schemes and a new merchant services provider, that will also provide a range of non-financial benefits including: new member referrals; better reporting; 11:45pm T+1 settlement for eftpos, Visa, Mastercard and American Express; improved payments switch redundancy which will reduce the risk of downtime due to outages; and the potential for store owners to earn Qantas points.
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