Tips on Merchant Accounts
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Tips on Merchant Accounts
Few Tips On Merchant Accounts (What companies say? and What they do?)
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 whose 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.
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:
• Charge back 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
Misleading ads
Just be careful about the misleading ads that you find out. Think of a company who lies on their ads will they give you all what they say they would, I don't think so!
Watch out for the ads like this:
• $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).
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:
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 fee
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 you're signing.