Why Repeat The Same Mistakes
Other Merchants Have
When Hiring a
Credit Card Processor?
MISTAKE #1: Playing the "Rate Game"...and Losing For many Merchants, selecting a credit card processor  is easy. Just call every processor in the yellow pages. Whoever quotes the "lowest rate" wins. Right? WRONG !!! Strange as it may sound, "low discount rate" and "less expensive" are not only NOT the same, but are in fact usually exact opposites, at least in the Credit Card processing business. How can this be? Because there are many things you should compare between competing credit card processing proposals besides just the 'rate'. For full details click here
MISTAKE #2: Overpaying for Merchant Processing Equipment Credit card processing equipment comes in many forms: Terminals, printers, pin pads, software, check readers and scanners. What kind of business you are as well as how you will conduct business determine what kind and what combination of equipment will best suit you. Don't necessary buy whatever the salesperson offers you. Ask questions! Buy what YOU need, not what the salesperson wants to sell you. To find out more about the things you need to find out when obtaining credit card machines click here
MISTAKE #3: LOW BALL DEALS When is a good deal not a good deal? When it goes away in 90 days or so, and then you're trapped in a lousy deal, that's when. In this business, it happens every day. Before you sign off on that wonderful deal the fast-talking salesperson is dangling before you, make sure you get answers to these questions IN WRITING; don't take the salesperson's word for it: - Is this great rate you're getting permanent, or is it a "starter" rate?
(Hint: This is easy to find out. Just look at the VISA INTERCHANGE SCHEDULE for CPS swiped transactions which you'll notice is 1.65% plus $.10. This is what the processor pays wholesale. So if he's charging you LESS than wholesale, you know something is fishy since obviously no business can sell below cost for long.)
- Did you get a full detailed proposal of ALL fees, including fine print? Or did the proposal consist of a low number written on the back of a business card? If so, watch out for when the other foot drops.
- How long is the rate guaranteed for? Is there an INTERCHANGE GUARANTEE, or none at all?
- What recourse if any do you have if they raise your rate, or if you dislike the service? What is the length of your contractual obligation? Early termination fee?
MISTAKE #4: Signing a Long-Term Processing Contract with Huge Early Termination Fees Just about all Credit Card Processors have some sort of contractual term requirement; usually two to three years which is not unreasonable. The problem is, some take it to extremes in blatant efforts to retain their Merchants even if against their will. There are contracts of exceptionally long terms out there with excessive EARLY TERMINATION FEES, some as high as $2000 or more. The obvious intent is to force the customer not to do business elsewhere no matter how much the Merchant wants out. Before you sign off on a deal like this, ask yourself: If this processor is so great and their rates are so low, why do they find it necessary to force Merchants to stay onboardeven when they don't want to by resorting to these extreme methods? Then RUN, don't walk, away.
Mistake # 5: 'Free' Equipment Scams Lets get the obvious over with right away. Deep down, we all know that nobody really gives away anything for free , that magical word that copywriters and salespeople love so much. Yet, human nature being what it is, we can't seem to ignore a perceived bargain, and salespeople, including credit card merchant service sales reps, know it. So these days, every processor has gotten on the 'free' equipment bandwagon, hoping free credit card machines will attract new merchants like flies to sugar. Before you are enticed by similar deal, here's what you need to know about every 'free' equipment deal I've ever seen. click here
Mistake # 6: Buying an Incomplete Processing Package John Ruskin, the 19th century essayist, said it best: "There is nothing in the world that some man cannot make a little worse and sell a little cheaper, and he who considers price only is that man's lawful prey. How does this adage apply to the merchant service processing industry? When a Merchant who shops for credit card processing services strictly on the basis of price alone...the cheapest rates, the cheapest credit card terminal or printer, the cheapest lease payment...he almost always finds out...after the contract is signed and it's too late to do anything about it, of course... that the way the processor was able to sell his service for less was by cutting a corner or two and leaving out important and possibly essential services. In the long run, these omissions cost the Merchant dearly in terms of lost business and profit. For examples and more info on this subject click here
Mistake #7: Hidden Fees What you don't know can and does hurt you. Many credit card merchant service processor offers give the illusion of being competitive by offering a too-good-to-be-true low discount rate. But they make up for it many times over by sneaking in a vast array of contrived additional fees well concealed in the fine print and often well disguised in the monthly Merchant statement as well. Welcome to the shadier side of marketing in which there is a very fine line between "not being truthful" and "only telling half of the truth". Let's be clear: All credit card merchant service programs consist of many fees, often packaged very differently. Some fees are legitimate; others are purely contrived. The point is: In order to evaluate the cost-effectiveness of any credit card processing program, you need to root out and consider ALL of the fees and charges, not just the discount rate. Obviously, a low discount rate with tons of extra fees tacked on probably isn't anywhere near the bargain it appears to be on the surface. For a list of some common hidden fees to look for click here
Mistake #8: Failure to Read the Fine Print I know! I know! Nobody bothers to read those pages of microscopic fine print before signing the Agreement. It takes too long. Besides, the salesman answered all your questions and told you everything you need to know. Famous last words! Let's not pick on salespeople; I'm one myself. But lets face it: If his job depends on meeting a sales quota, he's got a pretty strong incentive to tell you what you want to hear in order to coax a signature out of you. Or at least tell you only the good parts and conveniently forget to mention the stuff you don't want to hear. Fair enough? So here's one of the best ideas you'll hear today: Get a complete copy of the Agreement contract a day or two before you meet with the merchant services representative. Then read every word of it and make sure you understand it perfectly. If you don't like what you read...don't sign it!. When push comes to shove, what the contract says will trump what you say the salesperson said every time. By the way...if the salesperson balks at providing a complete advance copy of everything you'll be expected to sign, I'd suggest to take that as a HUGE red flag and forget about that deal. You probably don't even want to know what he's trying to hide from you. Contracts cover a lot of area. And contain a lot of landmines if you're not careful. For more important information on what to look for and which contracts to avoid click here
Mistake #9: Making Faulty Apples vs. Oranges Rate Comparisons Sooner or later, a competing processor will visit your business and hit on you with a convincing sales tool called a "T-Sale". You'll be seduced with promises of huge savings to your bottom line if you switch processing to their company. Be ready for him/her when he visits YOUR business. Their game is fantasy and their numbers don't hold water. To find out why click here
Mistake # 10: Increasing Your Cost of Merchant Processing Services By Adding Unnecessary Middlemen In other words, where are the best places to sign up for Credit Card Processing services? Many Merchants assume their local bank is the best place to sign up for credit card processing. No offense to your bank, but this is often not so. Most local banks are NOT Acquirers, Their ONLY involvement with the processing end of the business is strictly as a referral source. They receive a hefty bonus and/or ongoing commission from whichever processor they refer you to. And guess who pays for that? YOU do, of course. By going to your local bank instead of directly to an Acquirer, all you've done is add an unnecessary middleman to the pricing equation which increases the cost of the services you buy. To find out the best places to inquire about credit card processing services click here
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