Gravity Payments: How this Payment Processor Grabs Media Headlines?
More often than not, credit card processing businesses do not grab big headlines in the news as they tend to operate in the background – and, in fact, for many businesses, one payments processor is as good (or bad) as the next. Yet, Gravity Payments - a medium-size credit card processing and financial services company from Seattle, is extraordinarily different.
As a winner of Fast Company's 2020 World-Changing Ideas Awards, the company made waves in 2015 when it set an astonishingly high floor for the pay of all its workers. In particular, Gravity Payments’s Founder and CEO Dan Price caused a media firestorm and made international headlines when he announced his plan to implement a minimum salary of $70,000 for every employee at Gravity. The $70K CEO, with his unique vision and wise business approach, has handsomely transformed the company since its inception in 2004.
Let’s read on to explore how Dan Price established his empire and set the company apart within the industry which is pretty unglamorous.
Gravity Payments: The Growth Trajectory of Dan Price’s Golden Childbirth
To briefly introduce, Gravity Payments works as a middleman between merchants and payment networks, namely Visa and MasterCard, which in turn connect to banks that issue credit cards. So, let’s imagine – should you order a meal in a Seattle-based restaurant using your credit card, it’s Gravity that helps move your money from your bank to the restaurant’s, keeping a sliver for its service along the way.
Dan Price’s very first thoughts about credit cards started when his middle school band, Straightforword, was gigging around the rural southwest Idaho where he grew up. The “teenage rock star,” as his speaking-circuit agent now bills him, frequently performed at a local coffee shop whose owner, his friend Heather, usually complained about how much she had to pay for credit card processing and inadvertently taught him about swipe fees. “She let us do a show and gave us 100 percent of the door, but when someone wanted to pay their entrance with a credit card, we had to pay the fee,” humorously shared Price.
Coincidentally, around that time, Price’s father began consulting for the credit card industry. “I discovered through my dad, who worked as a consultant, the world of credit card processing,” Price shared at Forbes. “So I offered to help Heather with her business and was able to get her a better deal on her processing. And because of that, she told people about me.”
That moment was exactly when Dan Price’s mission in life became clear. He had seen Heather and other friends being taken advantage of by their payment processors and decided to fight against the “big names” bullying the independent businesses he cared about.
Learning the ropes from his dad, the 70K CEO helped some SMBs negotiate with processing vendors. In 2004, after starting college for one year, he and his brother Lucas founded Gravity Payments.
The company aims to enhance merchants’ satisfaction delivered via low prices and good service. Whereas that’s expensive, acquiring new clients can be even more so – in fact, the credit card processor reports to lose only approximately 9% of its customers a year. “Typically, there’s more than 30% attrition per year in our industry,” Price says.
When the financial crisis took a hard hit in 2008, consumers did cut their spending, and up to 20% of Gravity’s business disappeared within weeks. “It changed us from being mildly profitable to where we were losing money every month,” said Dan Price. At that time, he called a company meeting, stating that “in seven months we will be out of business, so let’s hold expenses and get into the black.” And it magically worked. By June of that year, the company was the largest credit card processor in Washington, with over 15,000 clients country-wide.
In 2012, Price began raising staff pay in steps and each raise did bring a surge in profit. The year after, Gravity hired compensation consultant Towers Watson to look at his salary. “The Towers Watson recommendation allowed for significant raises over the $1.1 million, but I elected to not raise my pay,” he said.
In April 2015, Dan Price announced that over the next three years, the company would raise the pay of all employees to at least $70,000 per year, stating this was the minimum needed to secure them from financial hardship when hit by unexpected expenses. Price, who previously paid himself a $1.1 million yearly salary, cut his own salary down to $70,000 to partially cover the increased pay for employees.
Following such a famous announcement, the company had a 91% employee retention rate in 2015, given the industry average figure of 68%. Besides, its customer retention rate did markedly increase from 91% to 95% and company profits have doubled. To be more concise, the company processed $3.4 billion in payments in 2014 and staggering $10.2 billion in 2018.
Key Success “Properties” Behind the Stunning Rise of Gravity Payments Within the Unglamorous Landscape of Credit Card Processors
Undoubtedly, there exist a plethora of factors contributing to the smash hit of the Seattle-based credit card service provider, yet, three "ingredients" do perform a crucial role in Gravity Payments’s success formula. So, what are they?
#1. Excellent “Offerings”: Seamless Payment Solutions at a Fair Price
Whereas the Seattle-based company made its start with credit card payment processing solutions, with the meteoric rise of online shopping, mobile transactions as well as other e-commerce use cases, the business needs have evolved dramatically since its inception in 2004. Specifically, Gravity Payments has expanded its service offerings to keep up with the evolving payment ecosystem while also providing a full range of payment solutions focused on small businesses.
“At the end of the day, payment processing is something that businesses need, but it’s not something they should worry about,” shared Edwin Dutton, Director of Finance at Gravity Payments. Instead, “they should be able to spend their time focusing on the business.”
Within such an ever-evolving payment world, Gravity Payments offers a full range of solutions to meet the payment needs of small businesses. The company’s credit card processing service includes mobile payment processing, the acceptance of card-not-present transactions, and hosted payment acceptance forms.
And beyond credit card processing services, the company taps into the fields of e-commerce, mobile payments, point-of-sale systems, invoices & recurring payments, gravity capital, gift & loyalty programs, integrated payments, etc.
“Our credit card processing solution provides and integrates with a wide variety of terminal and software options, including the latest mobile and EMV [Europay, MasterCard, and Visa] solutions,” as claimed on Gravity’s website. “We accommodate existing systems with ease, regardless of your current situation.”
What’s more, potential clients can find out if they are paying too much with their current credit card processor with the aid of the rate calculator on Gravity’s website. “We also have a portion of our business that has integrated products along with our services,” stated Dutton. “In those cases, we’re serving our point-of-sale partners as well as our merchants.”
When it comes to partnering with businesses that only deal in online transactions, Gravity’s e-commerce payment solution is available as a separate service as well. The same goes for its mobile payment solutions. Upon the sharing of Edwin Dutton, the company’s services can be smoothly mixed and matched to best meet the client’s needs.
Besides, Gravity Payments offers personalized, branded gift cards and loyalty programs to enable businesses to build awareness and incentivize their new and returning customers. Whilst these services were once only available to national brands, all businesses can now provide customers a convenient way to gift their offerings, with the gift cards provided at multiple touch-points to connect with their customers in-store and online.
Last but not least, Gravity Payments’s Working Capital program, better known as “Gravity Capital”, provides quick and simple funding for small businesses, empowering them to get a leg up with some extra cash. “Gravity Payments’ Working Capital Program provided me the funding I needed to finish a large patio addition. It was great not to have to mess with the process and red tape of a standard bank loan,” shared James Schmidt, the owner of Pecado Bueno - an order-at-the-counter restaurant in Seattle's Fremont neighborhood.
“We’re able to provide our clients with extra funds, when they need it, to make improvements or expansions to their businesses, and they don’t have to go through the process of dealing with traditional bank loans,” Dutton said. “We go through the numbers with them and advance them the money, and they pay it back over time through their processing fees.”
#2. A Highly Consultative Approach to Servicing Clients with a Wide Variety of Needs
Rather than designing a tiered payment and service offerings just like many other companies within the sphere, Gravity Payments aims to have their clients rest assured that they are truly getting the best services for their needs; hence, the credit card processor takes every single client on a case-by-case basis.
As regards Gravity Payments’s approach, Dutton shared that “We don’t really have set pricing structures.” He added, “With our consultative approach, we try to do whatever is best for the business. We have some clients on flat-rate plans because that’s what they prefer and others on cost-per-transaction plans because it’s what they want.”
Since Gravity Payments boasts a very high touch sales process, the team can efficiently walk through any and every detail with the customer. Furthermore, customer support, in general, is a huge deal for the Seattle-based company. “Our focus on the customer is what the company was built on and remains one of our biggest values,” he stated. “We offer 24/7 support with virtually no hold time on the phone. If we can’t figure it out over the phone, we can send someone to the business or ship equipment overnight.”
“All members of our Support Team are honored to serve the independent business in our communities. They’ll do anything possible (at any hour of day or night) to help them achieve success.” Apparently, such a strong focus on support is explicitly echoed on the company’s website.
Another great “plus” when collaborating with Gravity Payments is its capability of in-depth analytics – thanks to which, its clients can know where to orient their efforts and resources to improve or grow their own businesses.
“Clients can see analytics on their customers’ purchasing habits,” Dutton said. “Maybe they can identify areas where they have less penetration so they can target those areas and shape some marketing around that.”
#3. A Strong Focus on People to Disrupt the Payments Sphere Internally and Externally with
When you’re being paid a living wage, then you feel valued as an employee and you feel like, wow, this company respects my intellect and my ability.”- Dan Price, Founder and CEO Of Gravity Payments
When it comes to the well-known announcement of raising Gravity’s minimum salary to $70,000, Dan Price did not make the decision to lightly – actually, he spent sleepless nights pondering the idea and poured over numbers to see how to make it work. And as aforementioned, the CEO even took his $1.1 million salary down to $70,000 to help implement the plan.
When the 36-year-old entrepreneur, with shoulder-length hair and Brad Pitt looks, announced the plan in April 2015, it made huge media waves - not only across the world of payment processors but across the business world in general. Dan Price’s decision captured national headlines, started many CEO-level debates, and even landed him as a guest on “The Late Show with Trevor Noah.”
Nevertheless, the Gravity Payments CEO didn’t do it for the attention. Rather, it was simply an extension of the progressive point of view from which the company was born.
Dan Price shared that he wished to help ensure that Gravity employees could live a normal life without having to worry about covering the basics. Despite a few naysayers, the policy has been an overwhelming success by just about any measure. After the living wage policy was implemented, revenue has grown at twice the previous rate while the company’s profits have doubled. Markedly, customer and employee retention did significantly increase.
“…I realized that I had a responsibility as a leader to also try to serve the people that I was working with every day, that were making all the sacrifices to benefit independent business owners. I responded by instituting a $70,000.00 minimum wage at Gravity Payments, to ensure that everybody that works at Gravity could have the basics covered and live a normal life without too much struggle, as long as they were reasonably smart with their money, and reasonably conservative in how they spent it,” shared Dan Price in a conversation with Forbes. “Now, what I got back in return was better than anything I could have ever imagined, and was truly exciting and shocking in some ways. What I got back in return is, we went from instead of having zero first-time homeowners per year, now we have many first-time homeowners here at Gravity, and that is so exciting to me.”
Dutton said the increased minimum salary has led to more Gravity employees becoming first-time homebuyers and committed that Gravity Payments will continue down the path forged by Price for the foreseeable future, with a commitment to its communities, clients, partners, and merchants. “Gravity Payments recognizes the value in establishing an entrepreneurial, goal-oriented, rewarding, honest, and innovative culture, which is what makes our company such a remarkable place to work,” as stated on the site.
“The purpose of an organization is to make the humans' lives better. It's not the purpose of humans to make the organization better. That is 100% backward with how most of us look at companies and organizations. It's always company first, and I'm going to sacrifice myself, sacrifice my colleagues, sacrifice my integrity, sacrifice my loyalties, in the name of supporting the almighty organization, and that's really wrong. People should come first,” stated Dan Price.
The bottom line
Within the world of credit card processors that traditionally capture little attention, Gravity Payments magically made international headlines with its Founder & CEO’s announcement to set an astonishingly high floor of $70,000 as a minimum salary. Yet, there are more beyond that when it comes to the “ingredients” attributable to Gravity Payments’s success formula, consisting of the excellent service offerings, the unique approach as well as a strong and consistent focus on people.
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