Five Things to Watch Out for when Choosing a Merchant Account

Don’t be like this guy to left when choosing a merchant account provider! Take off the blindfold and read the post below:

I am writing this post for new or young businesses that have very little experience with merchant accounts. Let me start by letting you know where I get my knowledge on this subject. Many of my new clients have been in business for three to four years. When I first speak to them the first thing they do is send me their merchant account statement to review. My knowledge comes from these statements that are normally filled with exorbitant and hidden fees.

Here are five things to watch out for when choosing a merchant account.

1. Watch out for credit card terminal leases - if you go this rout it will help your short term cash flow but the terminal will end up costing you 400% - 600% more than if you just purchased the terminal. For more information see this article.

2. Watch out for proprietary terminals and payment gateways - these are products that only work with a certain merchant account provider. The good names you want to see on your terminal are Hypercom, Verifone or Nurit and authorize.net or Skipjack for your payment gateways.

3. Watch out for bucket pricing - typically if you the phrases “qualified”, “mid-qualified” and “non-qualified” are on your statement you are paying more than you need to for a merchant account. For information see this article.

4. Watch out for incredibly low rates - If you are promised a rate anywhere below 1.6325% + $.10, which is the base wholesale cost for a swiped Visa transaction, there is something going on that will not be a benefit to you. For more information on this subject go here.

5. Watch out for early termination penalties - just like the cell phone industry these penalties are very common in this industry. If you work hard you should be able to find a company that will provide a month to month agreement or one that only requires a thirty day cancellation notice.

If you think it is too early to get a merchant account here is a good post to read.

If you have been in business a while or are doing at least $10,000 a month go here and fill out the form and I will contact you shortly.

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