Searching for a Credit Card Processing Company?
While searching for a credit card processing company merchants are most likely prone to calling at least three companies in order to compare offers. Majority of the time someone will call into a sales line and a friendly sales representative will answer the phone. Most of these sales people that pick up the phone are looking to sign the business up right there on the first phone call. They are looking to tell the merchant exactly what they want to hear, whether it is true or not. There are a few sales tactics that we have run into that we want to educate business owners about.
The first thing sales reps will try and do that should be avoided is setting up your business on a Tiered Pricing structure. This pricing sounds great while they are explaining how it works. A tiered pricing pitch will sound something like this; “You will only pay 1.55% + $0.20 per transaction for credit cards. The only time your rate will be higher is if it were a business card or international card.” This is a blatant lie by the sales representative. The problem with this pricing is that majority of the time they are not telling you about their mid-qualified or non-qualified surcharges. More than half of the cards that you take will end up falling into these more expensive buckets. That 1.55% that they sold you on suddenly turns into 2.75% (mid-qualified) or even worse 3.75% (non-qualified). You would look at your bill later and see your effective rate around 4 or 5 percent. In most cases, the sales reps pay check is bigger because your rate is higher.
Equipment leases should be avoided at all costs. If you are going to be accepting credit cards at a stand-alone credit card terminal you should NEVER lease the equipment. Sales reps make huge profits by overcharging for the equipment to process cards. We have seen situations where merchants have overpaid thousands of dollars per year. Terminals like Verifone, Ingenico, Dejavoo, PAX, or First Data are all simple pieces of processing equipment. These terminals can range from $100 to $500 per terminal. We have seen some nightmare leases where merchants are locked in and paying $300 per month for 4 years! That is paying $3,600 per year for a terminal that costs $250 to buy! The salesman is most likely taking his friends out for a few rounds of drinks every month and the merchant is paying for it.
Some sales representatives make their money by the amount of accounts they can sign up in a given time period. Someone that is calling in trying to find out credit card processing costs for accepting cards on their website might get asked about a “free swiper” as well. What business owners do not understand is that nothing is “free”. This mobile swiper account is considered a completely different account with its own monthly fees and minimums. That sales rep most likely just hit a bonus because you agreed to get a second account. Majority of the people this happens to don’t realize they have more than one account until 6 months down the road and $400 in fees later.
Always keep in mind that these credit card processing salesmen are looking to overcharge as much as they can get away with. The more you pay to process cards, the bigger their paycheck. The reason we know these things is because we have been on that side of the credit card processing sales cycle. We have seen horrible pricing and deals that business owners have been set up with every day. It is unfortunate that the credit card processing industry has become such a deceitful one.