Operating a business today requires you to be able to accept credit and debit card payments. In order to do this, you need to set up a merchant account and obtain the right credit card processing equipment. However, there is a cost to provide this convenient payment method to your customers. Many businesses do not fully understand these costs and end up spending thousands of dollars, sometimes more, because they are hit with a wide range of fees.
Before switching or setting up a new credit card merchant processing account, take the time to review the following mistakes businesses tend to make to avoid doing the same.
- Signing an application before seeing a contract. There are online “applications” which ask you to provide an electronic signature, and, once signed, lock you into an account long before you see an actual contract. For online processing services, it is better to call them directly, request a contract, and, after reviewing it, then submit your online application.
- Failing to verify rate changes and increases. Visa, MasterCard, and AMEX all increase rates about every three years. The increases normally vary a half to one percent. However, there are some providers who will “blame” rate increases on the major credit card companies to collect more from you. Confirm rate changes and increases, and their frequency, with the provider BEFORE signing a contract.
- Thinking they are getting free equipment and/or introductory rates.Just remember, if it sounds too good to be true, in most cases, then it probably is. Some providers offer “free” equipment, but put in the contract “insurance fees,” or some other type of charge to recoup the cost of the equipment. You will also encounter those that advertise some special low rate, only to discover that is not what you end up being charged because there are outrageous requirements to get the discounted rate.
- Signing with a provider who advertises discounted and/or current interchange rate fees. All the major credit card companies charge providers the exact same interchange rates, regardless of the volume of transactions. As such, all providers must mark these rates up in order to make a profit. In some cases, providers mislead individuals by quoting rates for debit card transactions, which are less than the rates for credit card transactions.
- Not finding out what minimum amounts have to be met for discounted rates. One tactic unsavory providers do is to offer a low discounted rate, but attach an unattainable goal to qualify for the rate. Then they turn around and downgrade the transactions in order to charge a higher rate or use “bill-back” tactics so they bill this month’s fees next month artificially manipulating the costs so that the merchants can’t figure out what you actually pay.
Fortunately, you do not have to worry about these issues with Leap Payments. We are honest with our clients and help them select the most appropriate and transparent processing services to meet their needs. Call us now at 800-993-6300 for more information and assistance with switching services or setting up a merchant account.