Many times new merchants are taken advantage of by unscrupulous service providers, payment processors sales agents alike. By reviewing the points below and heeding the advice you'll go a long way in ensuring that you're not being taken advantage of. Never be afraid to ask questions and push your service provider for information, remember they want your business.
- Often the large company you understood to be a payment processor is simply a sales agent working to earn the highest commission at the stake of the merchant.
- Avoid processing companies with high set up and start fees. Most often new businesses start slow and have a high probability all together. Increase your chances of success by making sure you have minimal up front and monthly costs. Instead, use that money for marketing and advertising.
- Ask for quotes in writing from every processor who wishes to do business with you. Then compare and contrast the pro’s & con’s of each to make an educated decision.
- Watch for hidden or conditional fees that can appear innocuous but can turn out to hurt you in the end. In most cases the fees which are charged to the merchant are the following: transactions fee, batch fee, monthly statement fee, chargeback fee, application fee, termination fee, gateway access fee, and a monthly minimum fee.
- Watch out for deceptive pricing practices, for more information on that visit our Rates and Fees section to learn more.
- Start up costs can vary depending on the type of merchant account and the requirements to get it processing. Make sure you have a firm understanding of what it’ll cost to get up and running.
- Watch out for misleading advertisements which can lead merchants into signing agreements that are harmful. Some common adverts are:
- Cash Rewards if a better deal is found. These often require merchants to sign up and process through the processor before any reward is given.
- Low Price Guarantees. Remember, the lowest price is not always the best service.
- No Set up Fee. This can often mean they call it something else but still charge you fees to get the process going.
- Free Merchant Account. This is not true, do your research and find out where the fees are because there is no free processing service.
- 99% Approval Rate. This is of concern in a number of ways. First if a processor approves 99% of their applications they will not be around for long because of all the risk the processor assumes. Secondly, you don’t want to be just another account, make sure your processor knows you and will do what you need when you need it.
- Identify who the processors sponsor bank is. If the company mentions Visa or MasterCard it’s a requirement for the company to disclose who they are sponsored by.
- Make sure any hardware you buy is compatible with other processors. You never know when you’ll need to expand or change processors and having interchangeable hardware can make this process easier and less costly.
- Understand what your processing limits are. Make sure that you have the ability to increase your processing volume as your business grows. Some processors don’t want merchants who process high dollar figures so they may freeze your account to protect themselves.
- Research potential processors and make sure that they are stable and have sound business practices to ensure they will be around to help your business grow.
- Ensure your processor provides you your chargebacks in a timely manner. This enables you sufficient time to review and possible dispute the chargeback to recoup lost revenue. For more on chargebacks head over to Chargebacks 101.
- Read your contract fully and understand your rights. Many processing companies have a no cancellation policy or a hefty cancellation fee prior to the identified date of cancellation.
- Finally, don’t let processors push you around. You have rights and they want your business. Educate yourself and win big for your company by making decisions that benefit you and not your processor.