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.