While most automotive dealers focus heavily on front-end car sales and repair order volumes to drive growth, payment processing and financial workflow management present a massive, often overlooked opportunity to increase Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).
On the latest episode of Inside Automotive, Angelo Mendola, President and Chief Operating Officer at Priority Payments Local, breaks down how dealers can reduce operating costs, eliminate vendor overlap, safely navigate complex payment compliance laws, and deliver a frictionless checkout experience for customers.
According to Mendola, dealers process massive sums of money every single day. By simply optimizing how that money moves and trimming the operational bloat behind it, operators can add anywhere from 2% to 3.5% in new enterprise value directly to their EBITDA, all without selling a single extra vehicle.
Curing “multi-layer syndrome”
Ask almost any general manager or controller about their technology stack, and you will likely see their eyes glaze over. Between the DMS, CRM, customer texting software, service schedulers, payment gateways, and accounting plugins, Mendola says that modern dealerships are practically buried in software, calling this headache “multi-layer syndrome.”
“I don't think dealers have too much technology. I think some dealers have too much duplicated tech. They have a lot of vendors overlapping, and that's a bad thing.”
When 10 to 12 different vendors charge recurring subscription fees for overlapping features, operating costs skyrocket while employee efficiency plummets. Therefore, Mendola recommends consolidating down to four or five core tech partners, which will not only trim redundant software and cut monthly overhead, but also free up valuable staff bandwidth.
Surcharging vs. dual pricing
Mendola believes that processing costs rise almost every year as card brands tweak interchange rates and reclassify payment methods. To combat these squeezing margins, more dealers are turning to zero-cost processing solutions, specifically surcharging and dual pricing.
While both strategies shift fee burdens away from the dealership, the execution requires precision:
- Surcharging adds an additional fee when a customer chooses to pay by credit card.
- Dual Pricing displays a cash/alternative payment price alongside a card price, giving the customer clear choices at checkout.
Mendola warned that while the math behind these programs is straightforward, operational compliance can get tricky fast.
While proper compliance extends far beyond terminal software, it dictates how price tags are displayed across departments, how taxes are calculated, what appears on customer receipts, and how entries auto-post to back-end accounting systems. A single disconnect along that chain can trigger hefty regulatory penalties.
Operating at the “speed of trust”
Today’s car buyers expect total freedom in how they pay, whether that means traditional cash and card, mobile wallets like Apple Pay, text-to-pay links for remote service pick-ups, or Buy Now, Pay Later (BNPL) options for major repairs. A modern payment setup must accept all these tenders seamlessly without forcing the dealership to sacrifice accounting control.
When dealers decide to overhaul their workflow, speed is everything. In buy/sell acquisitions, store handovers often happen with minimal notice.
To keep operations running, Priority Payments Local routinely deploys field teams across the country on weekends, shipping equipment and installing systems on-site within 48 to 72 hours. For standard integrations, a smooth, 5-day onboarding protocol aligns IT firewalls, verifies state-specific regulatory compliance, and trains dealership staff across all departments.
“The customer should see simplicity, and the dealership should see control,” Mendola noted. By eliminating redundant tech vendors and implementing compliant dual-pricing strategies, operators can permanently erase credit card processing expenses and unlock significant EBITDA right beneath their feet.
