The Truth: This may be the most commonly used tactic in merchant processing sales, but the rate isn't the only price you pay, not and all transactions are created equal. In addition to your rate, you may also have transaction fees, authorization fees, AVS and CVV fees, batch fees, annual fees, monthly minimum fees, statement fees, customer service fees and more. Every merchant account will involve some of these, but make sure you understand what they are and how much you will be charged.
Now for the truth on rates: the pricing structure for a swipe retail business will be very different from a key entered business in terms of pricing as a result of the risk associated with the type of transaction. The farther you get from swiping the card and getting a signature, the more it will cost you. A standard pricing schedule should include the following rates from lowest to highest: Qualified Debit, Qualified Credit, Mid-Qualified and Non-Qualified. In some cases, a Rewards rate may also be available, but if not, rewards based cards will fall into the Mid or Non-Qualified categories.
Helpful Hints: If you ask if the rate is debit or credit, swiped or key entered, you may be surprised at the reaction you get. Most door-to-door merchant processors don’t expect business owners to know enough to ask this question. Make sure to get a copy of the full pricing schedule, including the categories above, before assuming that the low rate is true.
The Trap: You Need a New Terminal
The Truth: You probably don’t need a new terminal. As long as your terminal is PCI Pin Entry Data (PED) compliant and is not proprietary, you should be OK. Your payment processor will have a list of all PCI PED compliant terminals. If your terminal is compliant, most processors will be able to reprogram it for a low fee instead of requiring you to purchase a new one.
Helpful Hints: There are only a handful of terminals that are no longer supported by their manufacturers, so you definitely need to do your research before throwing your terminal out and purchasing a new one for this reason.
In addition to watching out for these traps, you should also ask the following of processor you consider:
- What will my overall savings be over my current processor, not just the rate?
- What is the term of the Merchant Agreement? Is there an early termination fee?
- What type of account will I be set up with, retail or key-entered?
- What per item fees will I pay?
- What annual fees will I pay?
- What monthly fees will I pay?
- How long will it take before I can see the money in my bank account?
- What is the availability of customer and technical support?
- How long have you been in business?
- Can I have the names of a few current customers to call for feedback?
- Do I have the complete terms and conditions?
- How can I reach you if I have any questions?
- Can I have everything in writing to review before I sign anything?
If you have any questions in regards to your merchant account, please feel free to contact us at 866-578-9740. We will answer any questions you may have.