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Top Ten Items To Look Out
I'm writing this list to educate the new merchant services customers about some of the actions of the less reputable organizations & tactics. I have seen a lot of very nice people taken advantage of so don't let it be you. I must tell you that most card service people are honest & if they are overpriced it's just that they work for a company with high prices. If you have any questions, or need more information call Bill toll free 1-888-322-3475
1. CANCELLATION FEES: Beware of the "TERM & TERMINATION" clause in the contract. Today most merchant services contracts LOCK YOU IN with a 2-3 year obligation & a $195.00-$395.00 or more "EARLY TERMINATION FEE"! We of course have no cancellation fee. We have this in writing from the officers of the company that controls your money, not from some sales rep. who has no control over your deposits & withdrawals. This is a way for a company to make you put up with their bad service, poor customer service or to prevent you from leaving after you find out they mislead you about the other terms in the contract. A large cancellation fee will keep you with their service long after you would have left for a better service. Has your bank ever told you that if you close you're checking or savings account they will charge you $300.00, of course not. Run do not walk! Run Away from this company, the salesperson will try to explain it away, do not listen unless you have it in writing.
2. Overpay for Terminals: If you found this on E-Bay you are already ahead of the game. Since you know the true value of these terminals you may want to use it as a measure of character for the salesman that your bank sent out or anyone you talk to in the future. Hold your cards close to the vest, tell them you know nothing & see what they tell you. Most local card services companies will try to lease the equipment first, and then sell for cash @ inflated prices. I have talked to folks who have paid over $5,000 for a $350 terminal. This game is very popular with virtual terminals now.
Special E-Bay Buyer Alert: There are a few sellers on e-bay who do not tell you if a terminal is new or refurbished, if the auction does not state NEW, they are probably refurbished, they sell them @ just under the new price & offer a 5 -8 year Warranty (not manufacturers warranty) to make you think it is new, but it is not unless it say's NEW. It is just a sneaky way to sell a terminal that is used or refurbished & make the buyer believe its new w/ out stating its NEW in the Advertisement, Also watch out for the dealers who warn you about having 512k of memory in a terminal in one auction but are perfectly willing to sell you for a Tranz 330 that has 32.8k of memory in another auction.
3. Leases: This is a continuation of the last category, however it is so abused that I gave it its own number. Most leases are for 48 months, longer than most car loans & leases. Four years to pay off a $350.00 item give me a break. Here is why they do it, if I lease you an Omni 3200 for 48 months @ 39.95/ month I will pocket about $1,000.00. You will pay about $1,800 over the 4 years & then may have to pay about $200 (close to original cost) to buy it out. Leasing does have its place, a new business w/ cash flow problems, a large # of terminals needed…. Only lease if you need to & never more than $24.00 - $29.00 / month, never more than 24-36 months.
4. Proprietary Equipment: Look out; this is a favorite trick of some of the Largest International Card Services processing companies. They sell you a piece of equipment that only works w/ their programming & when their crappy customer service & high rates drive you to switch companies you have to buy new equipment to go to another processor. This is not EZ since you are in a 48-month lease or paid $1,500.00 for it. You would not buy a car that ran on only Shell gas would you, NO. Stay with the big 3 in most cases (there are exceptions) Verifone, Hypercom & Nurit.
5. Buying Old Technology: Be very careful about buying Old technology. I know a great many of you will never use 10% of the features on an Omni 3750 or Nurit 8000, so these terminals are probably not necessary for your business. Do not buy old technology just because its cheap, a Zon is 20 year old technology, it may very well cost you as much as an extra 1% in fees on all your transactions, to use this terminal and for $30.00 more you could get a Tranz 330.
6. Buying From Your Bank: This can be a BIG MISTAKE; some of you may not even realize that the person the bank sent is not an employee of the Bank. (Few banks still write their own business) The person who comes to see you may just be a card service sales person who is paying the Bank a commission. Most of these have to set the pricing high because they have to pay the Bank. Most of them look @ you as an EZ sale, because they are usually the first Card Service guy you talk to. They prey on your lack of knowledge & trust that your Bank will not screw you.
7. Let someone fill out your app for you: Fill out your own application! Pay special attention to the Average Transaction Size, Monthly or Annual Volume & type of business (what you sell & how you sell it). Banks have different rules & underwriting criteria, the salesman may know that his company will take your type of business (mail order) if your transaction size is below $300.00 & monthly volume below $5000.00. Now if your average transaction is $600.00 & your monthly volume is $20,000, the salesperson wants to sell the equipment & make the $1,000.00 commission. They may leave those lines blank (so he can fill them in latter) or talk you into putting something less, this way the deal will go through, you will get a merchant account & he will get his commission. When you start using your account & running $500.00 transactions & try to go over the $5,000 a month, they may Freeze you account, because you are not doing business in the manner you indicated on your application.
8. Annual Fee: If you find one it is a Big Red Flag, most of the programs that have these are very hard to deal with. This will probably have a minimum & other add on fees. Usually hidden but there is no need for it, just a way for them to get a little more out of you. Also beware of programs with $10.00 Statement Fees& $25.00 monthly minimums. These are generally "B" Banks, for bad credit, they do net funding & have strict risk departments. You probably do not want to do business with this company.
9. Monthly Minimum: This is simply a way for the Bank or agent to guarantee that they will make money off you every month. The salesmen are instructed to say " its only $25.00/ month, you will do that no problem." What they neglect to tell you is that the $25.00 Minimum is not in total sales, but in accumulated discount fee's. Example: if your rate is 1.79% you will need to do about $1,500.00 in sales. To reach your $25.00 Monthly Minimum. You probably do not want to do business with this company.
10. Overpay for processing: There are three types of sales people in this business 1. Fair & honest, fair pricing on equipment, fair pricing on processing. 2. Equipment sales person, they will give away the rates to sell the equipment @ inflated prices or they are just trying to accumulate a portfolio to sell off in the future, this is not good, they do not care about you after they get paid. They do not care because they do not make any residuals off you in the future so they may sign you up with a substandard program to sell the equipment or get the account on the books to later sell it to someone who will jack your rates up. Example: 1.49% discount rate. This sounds great, but the transaction fee is usually high, has a large statement fee, monthly minimum… 3. Rate sales person: They will give you good prices on the equipment but charge you high rates for there service, the good thing is they will care about you because they are making money on you every month.
If you are shopping around for Credit Card Processing you should not pay more than: Mail, Phone, Net: 2.19% + .25 cents / transaction Statement Fee $5.00 - 7.00 / month. Debit Cards: .25 cents / transaction No Percentage
No Monthly Minimum. No setup Application or Programming Fees!
Wells Fargo Bank, N.A., Walnut Creek, CA, and Harris N.A.