Education Is Key To Signing A Merchant Service Agreement

For those of you that know us, we are a huge advocate of educating merchants and giving them the power to make informative business decisions when it comes to credit card processing for their businesses. We have heard all the gimmicks and the horror stories. Well we're here to try to debunk some of the confusion and the gimmicks and hopefully share some education. Let me start with those pesky telemarketers. Agents hire them to set appointments. If you own a business your probably on the "list"! Automotive industries are hit the hardest.
The agents will ask for certain industries that they market to or specialize in. These telemarketers are reading from scripts, promising you low rates. I especially enjoy the ones that tell you that they are offering you "wholesale" rates or since you have not had any chargebacks they can lower your rates. There are no "wholesale" rates. Visa and Mastercard Interchange (cost) rates are published on their websites. All providers pay Interchange (cost). It's all the "other" costs where the provider makes their profit. Let me add that there is not a national database that all providers share. One company can not see another company's information on any merchant account. So if you are talking to someone that claims something different, I say hang up the phone!! The rates a provider charges you can get confusing. Agents that sell your merchant account aren't necessarily lying to you they just aren't DISCLOSING all the fine print. So READ the fine print!! All contracts by law have to have all costs disclosed but whether or not you know what you're reading and looking for is the problem. (Please see my previous blog on our website to understand the two different ways to price merchants.) One, of the top tricks, is to offer a low rate. It looks really great. The merchant signs the contract thinking that all of the transactions will process at that rate! Wrong! They aren't disclosing all of the rates!
There are three rates that need disclosed! Ask for them!
Credit and Debit cards swipe at the same rate Wrong! Swiped debit transactions cost less than a swiped credit transaction. This is where agents can be deceptive. They will advertise or "sell" that low swiped debit rate but sadly to say you probably won't see that rate. In order to get debit pricing, your account has to be set up for it or you have to be on an Interchange pricing plan. The only exception to this is if the agent is pricing the merchant below cost. However, this typically means the agent has increased the downgrades fees or is charging you other fees to make up for the loss. I don't know too many people that will give away something for nothing!
Rates and fees disclosed in my contract are locked Wrong! Interchange costs increase and the providers have to adjust to those rising costs. Within the contracts, it gives them the ability to increase your rates and fees to adjust for those increases. Providers can pass on other fees that increase as well, such as statement fees, PCI compliance fees, etc. They pass on the cost of doing business just like any other business will do. Interchange rates generally change in the spring and fall. Your credit card provider should notify you in your statement prior to an increase. So read your statements!!