Warning!
Read these tips before signing up for a Merchant Account.  

Many payment processing companies make themselves look extremely
large on the Internet, yet are really just big advertisers
and high pressure sales people who are not really a payment processing
company at all. They sell processing for whoever pays them the most
commission and it is always the merchant who ends up paying for it,
usually in the first few months and in startup costs.

It is a known fact within the processing industry that more than 75% of new Internet businesses have a slow start or fail altogether. Avoid companies who’s high monthly fees will drain your resources. Remember that many of them are depending on those monthly fees to compensate their sales and marketing efforts.

Since most sales people in the merchant account business are never
going to tell you that there are better deals for you out there, we
have compiled a list of things to watch out for. 

What to Watch Out For:

Hidden Fees 

- Find out if there are any fees whatsoever that aren’t disclosed.
Here is a list of some of the garbage fees that merchants pay because
they are not aware of a better solution:

- Chargeback fees
– Retrieval fees
– Termination fees
– Gateway fees
– Gateway Per Item fees
– Hidden setup charges
– Non-refundable setup charges
– Batch fees
– Cancellation fees
– Minimum fees
– Pass through fees (these vary)
– Over limit fees
– Voice Authorization fees
– Voice AVS fees
– Non-Sufficient Funds fees
– Bank Setup fees
– Daily Close-out fees
– Software fees
– Licensing Fees
– Annual fees
– Amex/Discover setup fees
– Statement Fees (more for more services)
– Customer Support fees
– Technical Support fees

How
much does a merchant account cost? 

Typical
processing fees include per transaction fee, batch closing fee,
monthly statement fee, and chargeback fee. Additional fees that may
apply are application fee, termination fee, account maintenance fee,
monthly minimum fee, and gateway access fee. 

Most
business owners generally try to find a merchant payment
provider that offers the lowest discount rate. This fee is
usually calculated as a percentage to hundreds (basis point) on the
gross dollar amount of each
transaction and is deducted from your deposit of credit card
funds. In some
instances, it can be more advantageous to have a higher rate rather
than a lower one because the overall impact on an average ticket
depends on the way a merchant account is set up.

What
kinds of typical startup costs can I expect? 

The
establishment of a merchant account generally requires a nominal
application fee . There are, however, instances when a merchant
account provider will waive these fees as part of an advertising
campaign or in conjunction with added services. Additional startup
costs are determined by whether a retail or Internet account is needed
to accept and process payments. For example, a retail merchant account
might need a POS terminal and supplies to accept credit and debit card
transactions. Whereas, an Internet merchant account would need a
payment gateway and some form of a shopping cart to accept payment
from an online website.

Misleading
Ads

- Be wary about advertisements that are misleading or are flat out
dishonest. If they lie on their ads then most likely they will not care
about you later on. Watch out for blurbs like:

- $500 Cash Reward if you can find a Better Deal.
Research their reward and see what exactly they mean by reward. You
may be surprised to find out that the reward is actually a cash refund
after you sign up. 
– Lowest Prices Guaranteed (Again, research their guarantee.
They usually offer money if you can find lower prices, but the money
paid to you is a refund once you sign up).
– No Setup Fee (Search their prices very carefully, they
usually have another name for it like "real-time fee",
"gateway fee", "software fee", or "virtual
terminal fee").
– Instant Activation (These types of accounts have severe limitations attached).
– Instant Merchant Account (Be sure to ask them
when you can receive your funds).
– Free Merchant Account (This is a gimmick; find out
where the hidden costs and stipulations are, because every company
must make a profit somewhere).
– No Merchant Account Needed (Do you really want someone else
to handle
your money for you and pay you when they want to? Technically you are under their
umbrella, even though they issue you a merchant ID number. MasterCard
and Visa do not allow multiple parties to share the same merchant
account and will eventually shut these companies down).
– 99% of all Applications Approved (This is probably
untrue, any credit card processing company with a 99% approval ratio
is going to be out of business with all the risk they assume).
– 24 Hour Customer Service (Are they really providing it
or do they pay an outside answering service. Try it out before you
sign on the dotted line).
– 24/7  Technical Support (Are they really
providing it because a reseller must depend on someone else. Also if
you have multiple services, you may be calling many different support
lines).
– We Offer Credit Card Processing (Find out if they are
really just a sales office with no data center. If they are, they’re
at the mercy of a bank which may not live up to the sales office
promises).
– We Offer Merchant Accounts (Most credit card
processing and merchant account companies are really just sales people
selling for someone else.
– Accept Credit Cards and Checks (Is it one company
providing many services or a reseller selling multiple services for
multiple companies for the most profit? Remember that the merchant
will always pay for the higher commission that the sales people are
paid).
– We Offer International Merchant Accounts (What they often mean is that they process
payments from anywhere. Anyone who accepts Visa payments can accept
them internationally).
– No On-Site Pictures Required (Find out exactly what
they mean by this statement because this is a bank requirement).
– No Business License or Tax Returns Required (If this
is really happening then the bank providing the merchant account is in
a lot of hot water).

Remember that Visa and MasterCard regulations require that a
company disclose who their sponsoring bank is if they mention Visa and
MasterCard anywhere on their website or advertisement.

POS
Hardware
Scams 

Don’t assume that low priced hardware comes with the best
processing because it usually doesn’t. 

Don’t buy hardware that you can’t take with you to any other
processor.

Watch out for lease terms, this can be like buying a car. It is
sometimes irrevocable and you have to pay a high percentage rate like
15-20% because it is not in-house.

Some processors secretly lock their terminals with a code that only
their system can unlock. 

Always ask about the total startup cost, hardware pricing, software
license fees and be sure to shop around.

In 2005 the amount of POS terminals that were shipped in the U.S. were Over
3 million:

1. Verifone  (most
popular POS terminals in the U.S.)
2. Hypercom (most popular POS terminals in Europe)
3. Ingenico  
4. Lipman (most popular wireless POS terminals)
5. Thales  

Good Advice: Stick with the
most popular terminals. Find a company who sells and supports the most popular
POS Terminals for most types of businesses.

Give us a call or drop us an email
and we will try to help you sort it out.

You Don’t
Have Full Use of Your Funds

If you are non face to face business (non-retail) be careful
because many processors will freeze your funds once you start to show
any processing growth. This has put many companies out of business
because their cash flow was frozen by their processor. Most Processors
only want businesses that do less than 10,000.00/mo. and once a
business passes that amount they become a high risk business.

Lack of Integrity 

Verify their integrity! Do a background check and see if the company is known for doing
business with companies like yours. Did they become successful by
supporting online gambling casinos and adult porn sites? These two
industries bring in huge revenue:

“We felt the traffic on our site might be interested in the gaming world,” said Gary
Kremen, CEO of Sex.com. “It seems that the value of gaming is higher than adult sites.” 

Partnering with gambling and porn companies will bring legal issues
with your processing company, and possibly even you. Lou Hirsh of ECommerce
Times in his article for NewsFactor
called, Is Porn Still the Hidden King of E-Commerce? said,
"Experts noted that even as the porn industry as a whole rakes in dollars, it must also deal with legal limitations because of its taboo nature."

"Some companies, however, have decided that casino money isn’t
worth the risk given gambling’s dubious legal status in the United
States and the attempts by some state and federal officials to crack
down.

Just this week, PayPal (Nasdaq: PYPL)

of Mountain View was subpoenaed by the New York Attorney General’s
office, which is investigating online gambling." NewsFactor
July 15, 2002 

Chargeback
Management Issues

Many processors assume that the merchant is wrong and don’t process
the chargeback in a timely fashion which robs the merchant of an
opportunity to respond and avoid the chargeback.

Fees for chargebacks vary but most processors consider chargebacks
to be a huge source of revenue and therefore have no desire to limit
chargeback fees and help the merchant to minimize chargebacks to begin
with..

Discount Rate Not
Refunded

Most processors keep the discount rate whenever a credit is given.
What this means is that if your business gives a lot of credits to
keep customers happy, you can make a lot more money by working with a
processor who returns the discount rate originally charged with every
credit you give.

Big Bank
Outsourcing

Don’t assume a big bank is either better, or more ethical or has less
costs. Most big banks outsource all of their services and leave the
merchant paying the high fees. 

Declined
Transaction Fees

Be aware that if you host an online store then you are likely to
get a bunch of declined transactions. Those declines cost money per
transaction even if they are declined, usually around 20 cents each.
The processor will know if these are from fraudulent attempts and
might charge you anyway without telling you, as in many cases. A
dishonest processor can tack on declined transaction charges in many
ways and so it is important to work with a processing company with a
good reputation.

Contracts

Be careful of signing a contract too hastily. Read the application
carefully because some contracts carry a non-cancellation clause or
penalty. If a company will not leave an application with you
overnight, they are probably trying to use "high pressure"
tactics so that you don’t really know what your signing.

Good Advice

If you really want to get as close as possible to the truth about
credit card processing companies visit the Google Groups at http://www.google.com/grphp
and follow these instructions:

1. Type in the name of the company that you are considering signing
up with and add one of these keywords to it: "scam" "fraud"
"lawsuit" "ripoff" "sucks"
"dishonest" "illegal" without the quotes.

2. Find out what people are saying and see who has the best
reputation. Be sure to check the dates.

I was amazed to find out how many companies were either suing their own
customers for an unpaid cancellation fee or would not issue a refund
to an unhappy customer or would withdraw unpaid fees directly from a
merchants account without prior notification.

Remember that many companies try to cloak their dishonest practices
by selling out to a bigger company when the going gets tough. These
problems will not just go away so do your homework and find out the
history of the company you are considering signing up with. 

Note: Please mention
Credit Card Merchant Processor
when quoting from this article.

LEARN MORE!

If you are currently processing ask us how we can help you switch (fast and easy)

Allow us to understand and fulfill your payment processing needs and combine them into one comprehensive solution uniquely designed for you the merchant, your business, and your budget. Customized quotes are just a phone call away or fill out our online form and a customer service representative will call you.

ALL major credit & bank cards accepted along with checks
Single-source merchant services
Choice of equipment terminals (ask us what better suits your needs)
Online reporting / transaction management/ monthly statements
In-house RISK / UNDERWRITING departments
No High Prices
FREE American Express setup
FREE cost analysis & processing quotes
Discount POS Terminals and Equipment
Low Rates and Processing Fees
Quick Installation
Easy and Fast Approvals
Developer Support for Programmers
Real Time Internet Payment Processing
Experienced Company That You Can Trust
FREE 365 / 24 / 7 customer support

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