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How Credit Card Processors Shortchange You

Is your credit card Merchant Processing Account a complete package? Or did your processor cut a few corners so he could sell a little cheaper?

Here's what to look for:

  • No on-site credit card machine installation . Improperly installed equipment equals lost sales when it doesn't work right.

  • No on-site professional training. Were you and your staff trained how to SETTLE properly? How to run DEBIT correctly? Proper transaction procedures and protocols? The difference between a 'VOID' and a 'CREDIT'? These and dozens of other things that should be covered in on-site training will cost your business hundreds if not thousands of dollars over the years in surcharge and Interchange downgrades if you weren't trained how to perform them correctly. On-site training is a MUST !

  • No 24/7 technical support. Just wait until the network goes down or the equipment fails after hours, on a busy weekend, or during the holiday season. It happens every time!

  • Brand 'X' processing equipment. Second-rate equipment obviously sells for less than name brands like VERIFONE and HYPERCOM. It also breaks down more often and takes longer to repair which costs the Merchant lost business. It also increases processing discount fees if not properly certified by the network or not capable of performing required security functions such as AVS, which happens a lot.

While we're on the subject, here are a couple of other ways some processors sneak a few extra dollars out of your wallet:

  • Overcharge on Signature Debit: Did you know Signature Debit cards (aka Check Cards) should cost the Merchant less processing cost than a regular credit card? That's because Interchange, the processor wholesale oost, for Signature Debit is much lower than for straight credit. But lots of processors don't pass the savings onto their Merchants and just pocket the change for themselves.

  • Overcharge on Downgrades:
    • We've discussed at length about how Interchange downgrades certain types of transactions, resulting in higher percentage fees for the Merchant. But not all processors religiously interpret Interchange accurately for the benefit of the Merchant. Interchange only applies to the surcharge levied by the Card Associations to the processor, not< to the merchant; the processor is free to pass this surcharge onto the Merchant as he sees fit. So what processor A might call 'Mid-Qualified', processor B might elect to bill the Merchant at the highier 'Non-Qual' level and pocket a few extra dollars.

  • Merchant Club fees: Some processors access "Merchant Club" fees to Merchants, anywhere from $9.95 to $16.95 per month. This 'club' entitled the Merchant to free credit card supplies such as paper rolls, ribbons, and so forth. This may be a good deal for very large volume Merchants, but it is a terrible deal for most of them. Do the math: If your business uses maybe $40 worth of credit card supplies annually, spending anywhere from $120 to $200 annually for $40 worth of 'free' supplies is a pretty poor deal.

  • Nickel & Diming You To Death Some processors charge for things that shouldn't be charged for at all. Examples might be setup kits, data compliance surveys mandated by Visa and MC, periodic software upgrade fees, help desk fees...the imagination runs no limit. No legitimate processor would charge for any of these items.

  • Equipment and Supply Gouging Overcharging for supplies like printer rolls and ribbons is one common way of compensating for low ball rate quotes. Charging ridiculous merchant club fees for 'free' supplies at 3-4 times their actual value is another. Yet another gouge technique is to provide 'free' supplies but rob you with shipping and handling charges.