Video: Merchant Accounts - What to Look For and Ask About , Part 1
Watch this video and read this post to learn what to look for and ask when you are shopping for a merchant account.
What watch out for:
Super low discount rates – the lower the advertised rate is the greater your effective rate typically will be.
Free terminals or gateways – in business nothing is free in the long run. Chances are if you are paying nothing for a $300 terminal you are gong to receive a higher rate and a nice three year contract with a $300 early termination penalty.
Proprietary gateways, software and terminals – if you cannot use the “point of sale” products they are providing with other merchant account providers reject the offer. If you want to leave them but cannot transfer your data you are stuck! Or maybe you like buying new terminals every time you move to a new provider.
Questions to ask:
Can I have interchange plus pricing?
Do I receive rebates when I issue a credit to a customer?
Do my rates go down when a customer uses a check card? (Swiped Visa -.51% + $.05; swiped MC -.53% + $.05; keyed in Visa ad MasterCard -.25% + $.05)
Are there any other additional fees, margins, costs, etc. that you have not mentioned to me?
If you are going with a tiered rate plan ask for a break down of what card types are included in each tier.
If there is a minimum monthly discount fee, ask if that fee is waived if your discount fees for the month exceed that amount.
Is there an early termination penalty? If so, what is it?
Is there an auto renewal clause in your contract? If so, can I get rid of that?
When I have customer service issue who do I call? If they do not provide their own name or someone else’s, say good bye, you deserve better.
What is EIRF ad how can I get rid of it? If they can’t answer this basic question, say bye bye.
There are more things to look for and ask about, but this is a good start. If you have any thing you think I should add to list let me know. If you have any questions about this topic please add them to the comment section below or click the contact tab above.
NOTE: I have added a second part to this post, check it out here.
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Robb, nice post and video. I just looking to change from my bank’s merchant account and shopping. What do you think of ProPay? What is a reasonable discount? Currently bank charges 2.24% plus non-qual sales transaction fee of 10 cents per.
Sarunas,
I am not really familiar with ProPay. At first glance it looks similar to PayPal. Also, when I googled ProPay some negative comments came up on the first page of the search results.
I assuming 2.24% is for a card not present transaction. If that is the case that rate is just average. The thing that concerns me is the tiered rates. If they are like most in this industry the “non-qualified” tier is a major profit center for them and will cause your effective rate to be much higher than 2.24%.
I am going to write more to you on Twitter so this comment does not turn into a short book.
Thanks Robb, will follow your tweets on the subject.
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