As we all know the age old saying “if it seems too good to be true it usually is”. I write this to all Merchants in hopes to prevent you from ending up in a situation I have seen far too many merchants in recently. Like most industries there are ethical and unethical practices. Unfortunately for those that practice business unethically in my industry the victims pay a pretty price. My goal is to provide a few tips to avoid shady deals and warn you to do not buy if the following is presented to you by a Merchant Services sales person:
Unbelievably low processing rates: If a processor offers you more than a 35% savings there are more than likely hidden fees or teaser rates. Make sure you fully understand how they arrive at such significant savings and don’t just take their word. You want to see a true apples to apples comparison based off of your current processors rates and you want each and every fee to be accounted for and compared line by line. If the company trying to earn your business won’t do this you don’t want to do business with them as they are either not educated enough to explain this to you, or they are hiding something and breaking down line by line will expose their scam.
Not in the US: If the provider that is trying to earn your business is located offshore and not in the U.S. I would not work with them. There are plenty of local U.S. based companies that can offer you exactly what you are looking for.
FREE Equipment: Processing companies will offer you “FREE” equipment to earn your business. Like anything else is life “nothing is free”. DO NOT fall subject to this scam as most companies that lead in with free equipment have hidden fees; lock you into a long term contract with large cancelation fees, and make up for the FREE elsewhere. If you are offered free equipment make sure to ask the simple question of “how are you able to give this to me for free” .. “you must have a cost for this equipment so how will you recover your costs”. I can almost ensure you that if a company is going to offer FREE equipment that they will have hidden fees or lock you into a long term contract. My advice is don’t get locked into any long term contract rather purchase equipment if you need it as a honest company can sell a credit card machine to you for less than $200. Most of these shady contracts will cost you $500-$2,500 just to get out. There are legitimate companies that will offer free equipment as part of earning your business however this will not be their pitch to you and this will come later. And those companies that do offer this legitimately will generally NOT put you in a long term contract rather they will ask you to sign a free placement agreement that means as long as you process with them you can use the equipment. If you cancel with them you must give back the equipment. Do your homework if you are being offered FREE equipment.
Dine and Dash Representative – Be aware of temporary representatives that do not have industry experience. This type of representative will be swift in the sale and never to be heard of again. Always ask questions; how long have you been in the industry, how long have you been with your current company and ask them who their funding bank is. If they can answer these questions with confidence then you are likely dealing with a legit industry sales representative. You want to find out their role in the business; are they a sale rep for an ISO (Independent Sales Organization) and if so what ISO, are they a sales agent for a direct processor and if so what processor. You will then want to research the ISO or Processor as well as the sales agent to ensure you are doing business with a stand up and ethical company. There are a lot of companies that offer large signing bonuses to their sales agents therefore the sales agents will create shady sales pitches to do anything to close deals and get their signing bonus. If you have never heard of the sale rep and they seem like a “Dine and Dash Rep” then this is the situation where you ask a ton of questions and do not buy if they seem shady.
Equipment Leasing: This is the scenario I warn of with the most caution. Although as new technology rolls our equipment leasing will not be a bad thing and will become prevalent again you need to really be careful of companies trying to lease you new equipment. There are several very shady companies out there that will come to your business and tell you that your equipment is out of date, non compliant, against Visa/MasterCard rules and more. Then they will tell you that they can save you money on your fees by offering you a effective rate that is so much lower than your current costs that you can then lease a brand new piece of equipment without costing you any extra money because they are saving you so much on your fees. If you here this pitch do not buy! Unless you are 100% positive that you need new equipment and you have done your own research to ensure this then you should never entertain a sales person telling you that your equipment is out of date or needs to be replaced. Additionally if these sales agents show you one simple rate as oppose to breaking down your entire merchant statement and go line by line then they are not being honest with you. If these two common denominators exist (wanting to lease you new equipment and saying that they wills save you enough on your fees to pay for the leased equipment) defiantly steer clear of the company. Not only will you get stuck in a 48 month lease any end up paying $4,000 for a piece of equipment that cost $200, you will be locked into a long term contract with rates that are higher than what was presented. Make sure to really ask questions and investigate the company soliciting you before you buy.
I write this blog to warn merchants and to educate merchants of common tips to look out for when selecting a Merchant Service company. There are many honest, and ethical companies out there that you can choose to do business with all of whom will not try to sell you on all the above mentioned ways. Credit Card Processing fees are a major part of your business therefore take the extra time to find a trusted company that has a good reputation and you feel comfortable with.
The writer of this blog Jeff Brodsly in an industry veteran who is the Founder and CEO of Chosen Payments. If you wish to speak to a Chosen Payments representative to ensure you’re being treated properly with respect to your merchant processing account please reach out for a free consultation. Chosen Payments takes pride in educating merchants and will assist all merchants’ weather clients of Chosen Payments or not. You can reach Chosen Payments by emailing info@chosenpayments.com or calling toll fee (855) 4-CHOSEN (424-6736).
