During my eight years working in the merchant account field, there are business owners who perform little if any examination when selecting a processor.  Others spend countless hours assessing proposals, favoring Excel spreadsheets and independent reviews.  Regardless of the amount of research performed, it is easy to get sucked into a quagmire when needing to gain credit card processing capability.

There are several potential minefields in the “merchant processing” industry.  Here is a quick list and brief description of five glowing mistakes committed by many seekers of merchant processing.

1)      I signed what? – Of course, you may have to enroll in law school to understand all the facets written in the contract.  However, it is imperative to know whether or not a cancellation or termination fee is imposed should you close the merchant account.  When I receive phone calls from folks who are thinking of switching to our service, I’m always a little surprised when some tell me that they have to investigate whether there is a closing penalty fee.  The time to find out about any possible merchant processing termination fee is before you sign any contract.

2)      What is your mid-qualified or non-qualified rate? – These related questions may surface well after business owners sign a contract and open an account.  Merchant processing typically entails tiered rates, and too often processors disclosed the lower qualified rate and leave out the more expensive mid and non-qualified rates.  (A retail account will have at least three tiers and an Internet or keyed in account will have at least two.)    

3)      What are your hidden fees? –  Merchant processing, at times, is enveloped in a cloak of secrecy as too many credit card processing companies fail to disclose a litany of rates.  Before considering any vendor, business owners must try to gain a firm grasp of all possible rates in the merchant account industry (including batch fees, AVS fees, chargeback and retrieval recovery fees, gateway fees, PCI compliance fees, etc.) so they can better compare and contrast offerings and perhaps even reward those merchant processing providers who demonstrate full disclosure.

4)      How long is this lease? – Blurry-eyed merchants who are launching a business, saddled with so many other concerns when opening their doors, are especially vulnerable to signing an equipment lease where they will pay unnecessary hundreds – some even, thousands – of dollars for inventory that they can buy much cheaper upfront.  Retail merchants who just need stationary terminals should avoid leasing at all costs.  There are plenty of affordable machines; some merchant processors will even provide free equipment although you should know all the caveats.  Wireless merchants can even find great deals for more expensive wireless machines.  The only time to even think about equipment leasing is if you’re in the market for very expensive POS systems (as you may find in restaurants) to process credit cards or if there is absolutely no money left from other business-related expenses.

5)      Where is the support? – Merchant processing is unfortunately notorious for inept support with some notable exceptions. J  Some agents are very fastidious when courting a merchant but then choose to ignore merchant questions or concerns when they arise at a later juncture.  Many merchant account providers also are lackadaisical returning phone calls or extending a high degree of courtesy and sense of professionalism – especially if disagreements with business owners surface.  Successful merchant processing truly depends on great service … as well as great rates.

Please keep the above list in mind to avoid becoming a casualty in the sometimes murky field of merchant processing.