A merchant account is a vital part of any business as most customers expect to be able to pay with a credit or debit card. The merchant services industry is one of the most deceptive industries in operation today as providers prey on the fact that most business owners have little knowledge on a merchant account set up. The industry has been the same for the last 10 years and so have the attitudes of most owners.
It is very common for unsuspecting people to get seduced by teaser rates and free offers and subsequently get locked into contracts that are not beneficial for the business. Here is where a little research can go a long way.
Why haven’t things changed?
The main reason is because business owners don’t wish to know anything about their account. While this may seem like an overly generalized statement it’s true and unfortunately, understandable. Most business owners have much more critical items to attend to. Merchant services are boring with little excitement in its operation. Business owners want payment processing to operate transparently beneath the company. The only time it is thought about is when there is a problem or when processing seems over priced.
At this point you may be stuck with a processor that is unresponsive or unwilling to help lower your costs. Both are a major problem as the average merchant service contract term is 3 years.
What can be done with a minimal time investment?
Do a little research. I little time spent up front to understand the basics can go a long way in comparing providers. An hour or two of time spent up front can save countless hours and $100 if not $1,000 of dollars later. You want to know:
- The types of accounts available to your business
- The rates and fees associated with the account
- The contract term and termination penalty
Compare your rates. Make sure you look at your contact and examine the rates that are displayed. It’s very easy to sneak in rates on the contract so make sure you read your contract and ask questions about anything you don’t understand or agree with.
Don’t rush into an account. You are substantially more likely to be taken advantage of if you have to get an account open quickly. Your account is a mission critical piece of your business but rushing to get an account open can end up costing a great deal over the life of the operation. Plan ahead and take your time with deciding on a provider. Trust me; you’ll be glad you did.
If it sounds to good to be true – IT IS! Merchant service providers have countless options in which to structure the pricing on your account. It is very easy to advertise a teaser rate – say 1.29% - while making up the difference with junk fees buried in your statement that no one can possibly understand. The unfortunate part is that these “bargain accounts” end up being far more expensive than a legitimately advertised accounts.
Begin your research with 7 items to consider when looking for affordable credit card processing
Does your business accept payments from a payment gateway or ecommerce site? What you pass back to the customer when the credit card is declined may expose your business to a new form of merchant account fraud
, called card testing and end up costing you a bundle.
Maxx typically recommends making the response to the customer as vague as possible and specific as necessary. After all, the goal is to retain the customer’s order through offering helpful messaging in the case of an error. There is a very important balance here as you do not want to provide too much information making it advantageous for card testers to use your site.
Card testing fraud is a two step procedure. Step one is the practice of using a computer program to test credit card numbers until a valid card number is found. Step two is to use a similar program to then find the correct expiration date to validate the transaction.
Your merchant account and gateway charges you for every transaction regardless of weather the transaction is approved or declined. There for if your site is providing the correct information to a card tester they will typically attempt as many transactions as necessary to get a card number and expiration match. The result – hundreds, if not thousands of attempts. Depending on you’re contracted per transaction rate, this could result in substantial costs to your business.
How can you protect your business?
First, block the IP addresses for known card testers. Here is a list of the IP addresses for know card testers.
Second, develop an error messaging strategy with different responses depending on the error passed from the gateway. Again, a good practice is to be as vague as possible and specific as necessary.
|“General: We are terribly sorry but the card you are attempting to use has been declined. Please use an alternate credit card and submit your order again. If you are still experience difficulty please contact us directly at (800)xxx-xxxx and we’ll be happy to assist you.”
|“AVS mismatch, or other error: We are sorry but the address and zip code entered does not match the information on file with your credit card issuer. Please re-enter the address and zip code. If you are still experience difficulty please contact us directly at (800)xxx-xxxx and we’ll be happy to assist you.”
It is always a good idea to monitor your transaction closely to insure you are not victimized by fraud attempts. If you feel you are experiencing an abundance of merchant account fraud attempts there are numerous tools available to help mitigate credit card fraud. If you would like information on these tools please contact us at (800)917-8026.