A merchant account is an important part of owning and running a business successfully. Much like applying for a loan, a merchant account is a type of business banking account. It is underwritten and approved, and subject to monitoring and oversight for any problems over the life of the account. It isn’t something to be taken lightly or left in the hands of some uneducated, fly by night salesman just out to make a buck.
In this article we’re going to highlight some of the mistakes merchants make as well as some things they might not think about when selecting their credit card processing service.
The biggest mistakes merchants make with credit card processing…
One of the biggest mistakes business owners make is not thinking about their merchant account and the merchant service provider (MSP) as a business partnership they will be making for the life of their business. You’re not just looking for someone who can sign you up, as cheap as possible, you need a provider who possesses a deep understanding of and has extensive experience in the payments industry. One who can promise a reliable network and cares about their customer service. Remember, your MSP isn’t just getting you great rates, they are there to provide you with a service that is intended to not only help you conduct business but also to build your business. They should be interested in assisting you in staying relevant in the payments marketplace and provide the options that satisfy your customer’s needs.
When you start looking at your MSP as a business partner you will automatically gravitate to the one who also looks at your partnership as a long term business relationship. When you have this you can see how all of the following will just naturally fall into place.
Don’t just go directly to your bank!! I know you love your bank and as a merchant who already has a business bank account with “your bank” it may seem like the best option to also let them handle your merchant account. That couldn’t be more wrong. The truth is the part of the bank that handles merchant services is not that nice little local branch where the teller knows your name. They are much bigger than that. It is industry standard that big banks charge 33% more, on average, than independent service providers charge. Due to shareholders interests, profit margins and generally higher overhead these banks are not as flexible with their rate structures as independent service providers. Banks almost never provide their own customer service so don’t think they know you. They rely on the 800 number provided by the actual processing, or acquiring, bank.
It’s not just about the rates! But when it is…this is what you want….
Don’t just go with the lowest initial offer or quote. Most of the time this is just an initial rate or teaser rate anyway and is not sustainable. Besides, it doesn’t really matter how low their rates were if you can’t count on your money. How reliable is their network, can they promise dependable deposits, do they provide transparent reporting?
It is also important to consider whether this sales guy will be around when you need him. How is the customer service? Are there other supportive products that they offer such as chargeback management software?
But at some point it IS about the rates and one of the biggest mistakes we see is merchants getting talked into a bill back method or tiered pricing structure. The only truly transparent pricing is called Interchange plus pricing. When salesman talk you into any other pricing, tiered, bill back or any other term you are definitely not getting the most transparent, fair pricing. Everyone from that big bank to the independent service provider starts with the same prices, called Interchange, for processing credit cards. When a quote is written based on Interchange Plus it very clearly shows you exactly how much the mark-up is in addition to the Interchange fees you will be paying for the services. Tiered pricing however bases the rate on the card type. There are literally thousands of card types and the processor gets to decide which cards fall into each tier, qualified or non-qualified, not you. They can actually decide that 90% of card types will fall into the higher rate tiers and still tell you that you’re getting a great rate for “qualified” cards. If you want to most transparent costs you must insist on Interchange Plus.
Another important factor when it comes to your overall rate, or effective rate, is additional fees to the actual processing rate and the mistake of thinking that fees are not negotiable. These extra fees can really add up and send what seemed like a great rate through the roof, and you’re not just stuck with them. Merchants are often so focused on the fees associated with processing the actual payment that they forget to pay attention to the other fees and that means costly charges can often be overlooked. What are these additional fees? Many providers will try to charge the merchant extra for things like start up fees, monthly maintenance and cancellation fees. It’s imperative to remember that these are all almost always (ridiculous) negotiable. Many of these fees are pretty bunk, make sure your processor is transparent about these and definitely ask to get them lowered or eliminated. Better yet, look for a processor that doesn’t charge these.
Be picky about who you decide to trust your baby with. Being able to accept payments and be funded with those payments is an integral part of your success. Don’t settle for less than you deserve in a business partner. To make sure that you are getting only the best, well-educated service provider demand that they are an (Electronic Transactions Association). Due to constantly changing technology, increasingly stringent compliance requirements, and growing government regulation the payment processing world is more complex than ever. Merchants don’t have to know everything but they should expect their payments processor to. There is no actual education or educational requirements for the payments industry. The ETA CPP is the only certification program available to the payments industry and it is voluntary. When you demand your processor is an ETA certified payments professional you are getting a professional who is dedicated to his industry. It means that trustworthiness, knowledge, and experience are advantages you can expect.
ETA Certification is viewed as a symbol of excellence in the industry. Certified payments professionals have agreed to conduct themselves according to the ETA Code of Conduct or risk a disciplinary process. Applicants must have a deep knowledge of the industry’s operations, compliance, risk, and security in order to pass the rigorous exam, as well as complete continuing education. Making sure you are partnering with an ETA- Certified Payments Professional means that you have found a businessman who is dedicated to professionalism, knowledge, security, and responsibility.
Another mistake merchants make, and that we see all the time, is submitting multiple applications for approval. Just scattering multiple applications all over the place and seeing who comes back with the best deal is not a good tactic! And believe it or not, it could actually cost you a good merchant account. Many times multiple applications submitted through different independent service providers end up with the same acquiring bank’s underwriting. This ends up resulting in a red flag that can get the application declined. It is always better to find the best service provider who can offer you the fairest rates along with the ongoing support you need and apply once with them.
We’d like to invite you to partner your payment processing needs with Bankcard Brokers. You will soon find that you are working with an organization dedicated to ethical, professional, and dependable service levels. Bankcard Brokers has always taken pride in the fact that we insist upon operating with the utmost transparency, service, and credibility. We know that in order to earn your business for the long haul we have to provide more than just the best rates, though we try to do that too!