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Merchant Accounts

Merchant Account Tips and Gotchas

Here are our tips of what to ask your merchant service provider and what to watch out for.

  • The Hidden Contract:   Every Merchant Account Service Provider and ever Merchant Account has a contract.  You can't get a merchant account without signing up typically at least for a one year committment.   This is because merchant service providers have to make an investment in their customers and in a new merchant account.  Typically a new merchant account is a complete loss for a merchant service provider for at least 6 months.  They are giving away products and services in the hopes of you becoming a successful business.  Having said that, you need to see your  contract and you need to read every detail in your contract.  Some of these contracts have all sorts of hidden fees and cancellation clauses.  Things that sounded free when you signed up, turn out not really to be free. Even your rate turns out to be only a temporary thing.
  • High Cancellation fees and Sunshine clauses:   We see this all the time when we attempt to move a customer over to our service.  We work to get them better rates only to find out they literally CANNOT cancel their existing service.  Well they could but it would cost them a fortune.  Many merchant service providers have huge cancellation fees.  These can be in excess of $500 just to cancel your service.  And, on top of that, there may be only small windows where you can cancel.  We have seen merchant service provider contracts that have a $800 cancellation fee and renew every year.  You have a window of 30 days to cancel the contract at your anniversary date and if you miss that window, its another $800 to cancel until that window returns.  Its insane.....don't get caught in something like that.  Our cancellation fees are very reasonable and are only equal to the basic minimum charges for a years period.  These only last a year and on occasion they are reduced for customers that cancel nearly at a year for good reason.
  • Teaser Rates.  Some Merchant Service Providers advertise teaser rates.  These rates are only guaranteed for a certain short period of time and then your rates will increase.  Make sure you are negotiating the final and long term rates for which you will be charged and that you read the fine print.
  • Bait and Switch Rates.  Many Merchant Service Providers tell you an extraordinary rate in the hopes of you signing a contract with them.  However, once you start processing, they contact you back in a few months and tell you that you are not doing as much processing and your company is not growing as much as you indicated to them.  They tell you as a result, your rate will have to increase.  Unfortunately, your locked into a contract and they tell you the new rate is what you would have to pay anywhere else as well.
  • Hidden Fees.  Make sure all your fees are disclosed and you understand them by reading your contract.  Sometimes fees are disquised using multiple names to create a new fee.  For example, many companies have a statement fee, some also have a customer service fee, customer support fee, annual fee, a compliance fee, a licensing fee, and an number of other fees which would be in addition to the standard statement fee.  These merchant account providers are taking advantage, in some cases, that a statement fee might be called a customer service fee by a different merchant service provider and they decide to charge both of those fees and perhaps a PCI compliance fee on top of that.
  • Hardware POS scams.  Lots of scams where a merchant service provider is really pushing their own hardware.  Stick with the top name brand Point of Sale Equipment like Verifone, Nurit, Hypercom, Lipman, and Way Systems  The supposed lower rates are not useful if you can't process any transactions.
  • Misleading Advertisements.  Anywhere from guaranteed lowest rate, cash back rewards if you find a lower deal, 99% of all applications approved in less than 24 hrs.  First if 99% of all applications were approved in less than 24 hrs, chances are the bank is barely even checking the credit worthiness of its merchants.  Do you want to have a merchant account with a bank or business that's out of business in 5 months?  Not really.  Most of these misleading advertisements do more harm to the business than good.  They make the merchant account business seem like its a bunch of card/loan sharks using used-car sales tactics.  Nothing is further from the truth.  A good merchant account service provider such as is looking to partner with its customers where it can offer its customers true savings and true service.  If no such sales consultative aspect exists, than we move on to other sales opportunities where we can truely save our customers money and time.   There are plenty of worthwhile opportunities for happy customers without having to deceive anyone.  How can everyone have the lowest rate guaranteed?  Isn't the lowest rate a "single company"...look around there are tons of guaranteed lowest rate.   This is fundamentally impossible.  Stick with professionalism.  Give the merchant account service provider the information and put it in their court to determine how to get your business or keep your business with honest pricing and professional service.