Updated on November 22, 2021
Avoid Credit Card Mistakes
After working in the credit card processing industry for over 10 years I’ve realized that many business owners are making the same mistakes over and over again. “Just because you see what looks like a good rate to accept credit cards doesn’t mean it’s the right company for you or your business. They might be right for someone who likes to get taken advantage of but something tells me that’s not you.
Please don’t be alarmed by the information you’re about to read as we will show you the easy way to avoid all the common credit card mistakes.
Expert advice can help you avoid costly credit card mistakes and take the dent out of your bottom line.
Getting hooked by a processor or sales rep that advertises low rates
What we’re seeing in the industry is business owners are googling for the best credit card processing rates and they click on an ad that shows something like rates starting as low as 0.29% and say yeah that looks pretty good to me, sound familiar? Hope not but if it does then you’ve definitely found the right information. I don’t want to complicate things but in the merchant account industry there are literally hundreds of different rates that you can be charged or overcharged if you don’t know what to look for. Avoid web sites like creditcardprocessing.net and TopTenReviews as the standards are completely different and you may end up in one of the situations we mention in this post.
Not too long ago I signed up an Electronic Health Records company which was doing big business and had a rather large processing volume and apparently didn’t know how much they were being gauged every month by their credit card processor. They were on what’s called a tiered rate plan which was insane, especially for a company of that size. You see when you’re on a tiered rate you usually sign up with a processor that advertises rates as low as 0.29% or similar and that means downgrades or extra fees known as surcharges. You’re going love this; when I put them on the right pricing plan, I saved them $156,000 a year. I mean really, like they say on Deal or No Deal, that’s a lot of money.
You must understand the nature of the business to get a really good deal. What I would suggest is to check out this link and learn the easy way everything you can about interchange-plus pricing. You won’t be sorry and just saved your company a ton of dough. It’s the “ONLY” pricing model that makes sense if you value your hard earned money.
Signing a 3 year or long term contract
Many times the merchant doesn’t ask and the rep doesn’t divulge the fact that you’re signing a long term contract. I don’t know why the business owner isn’t asking but I do know why the rep isn’t saying anything. There’s usually an upfront bonus for sales reps in our industry for signing the merchant on a 3 year or long term agreement so it’s in their best financial interest to just pass on by this subject. Don’t get me wrong, there’s plenty of ethical reps in the credit card processing industry, however there are also those reps that are looking to make as much as they can on your account. Here’s the biggest problem with a long term contract, if you don’t like the company or the rates go up, you’re stuck until the term is up. The easy way to solve this problem is read the fine print in your contract even if the rep gives you a satisfactory answer. What else comes with a long term contract? You guessed it, cancel fees or ETF’s early termination fees. These fees can range from a simple $195 cancel fee to $500 and you could end up paying the amount of profit the processor would have received for the life of the agreement. The biggest problem is people don’t want to take the time to read the fine print or in this case the Terms and Conditions of the agreement.
Here is the best way to solve this issue; ask for a month-to-month agreement and have the rep point out where it says that on the contract with no cancel fees and you will be okay. At least in this instance if something goes wrong you can simply find another processor that will give you the same terms. What I’ve found over the years is if a payment provider is offering you a month-to-month agreement with no cancel fees, they’re always earning your business and merchants usually don’t have the type of problems mentioned above.
Not checking out the processors BBB report
Here at Best of Category Reviews we have our fair share of merchant account providers asking if they can be part of our site and recommendations and the very first thing we do is look at their BBB report. Of course we are very selective on who we recommend and have strict processor guidelines but if their BBB report shows an abundant amount of complaints we have to respectfully decline. We see companies that are accredited and have an A+ record but have 200-400 complaints in the last 3 years, the sirens go off and the red flag is raised because we can’t in good conscience recommend any processor with an overwhelming number of complaints. It’s really easy to navigate the Better Business Bureau site and we employ you to make the click if you’re considering doing business with any merchant account provider.
Giving inaccurate information regarding volume and averages
No one likes to get their money held by the processor but it happens quite frequently when you’re not making sure that the monthly volume, average ticket and high ticket are set correctly with the processing company.
If you tell the processor or rep you’re average ticket is $50 and all of a sudden for any reason you start running $100 transactions, the processor is going to want to make sure there’s no fraudulent activity on your account which will probably result in a “hold” on your account, not a freeze but a “hold”. They will investigate any or all abnormal activity to ensure there’s nothing fishy going on. Once the investigation is completed your funds will be released unless they need additional documentation from the business to clarify.
The same goes for High ticket and monthly volume. You never really think about this until the business funds are held but in reality the processor is trying to protect both your business and theirs. Before you give out the information the provider, double check your figures and make sure that you’re giving out the correct figures. Sometimes things change within a business via markups, price increases, ect. and when it does contact the credit card processor and let them know of the changes. If you have a high ticket or larger monthly volume for any reason, call your processor and give them a heads up before anything out of the ordinary happens to avoid the dreaded “hold”.
You’re not looking at your monthly statement
If you’re not looking at your monthly processing statement, chances are you will be overcharged. We see it all the time when a merchant either doesn’t have the time, doesn’t understand it or in some cases does not even receive one. If you don’t have the time make time. If you don’t understand it then call your processor customer service department and have them explain it to you so you do understand. If you’re not receiving your monthly statement, either you’re dealing with a shady processor or they have switched to online reporting in which case you still need to call the processor and find out exactly how you can get to your statement every month.
Why is the merchant account statement so important? For starters it has important information such as deposits, funding, charges and fees, tax info, summary, refund transactions for your protection to make sure everything is completely accurate. Then of course there’s that tiny little fine print that no one ever reads which is usually where you find any increases. Now a good processor will let you know when interchange prices have changed but a bad one will let you know about the changes and use this as an excuse to increase your rates, no matter what pricing plan you happen to be on.
You didn’t use BestOfCategoryReviews.com for price quotes from the most respected processors
How does it work? You fill out some basic information about your business and processing needs (through our online tool, Rate Crusher Price Quotes) and the top tier processors compete for your business. The payment providers with the best two price quotes are the only ones that receive your contact information. In the mean time you receive a summary review on the top two providers along with a checklist to assure you get the best possible deal. You pick which processor makes you feel warm and fuzzy and the savings begin.
How can Best of Category Reviews help you?
- Transparency is everything. We focus on the total pricing instead of just the rates.
- Our processors are “ONLY” allowed to offer interchange-plus pricing coupled with no contract or cancel fees.
- 40% Average Savings vs. tiered rate pricing
If you need more in depth information regarding how a merchant account works and all the intricate details, please visit this link from FDIC. https://www.fdic.gov/regulations/examinations/credit_card/pdf_version/ch19.pdf
Best of Category Reviews is an online platform that focuses on merchant credit card processing reviews for online stores and small businesses. Our recommended payment providers are the “Best of the Best” and their customer service is no different. Best of Category Reviews gives merchant credit card processing reviews based on research for Merchant Service Providers and Payment Solutions and offer a unique online tool where processors compete for your business to get you the best possible deal saving businesses an average of 40%. We put our payment providers through a rigorous vetting process, verify and re-verify to make sure that everything we recommend to merchants are completely accurate. When it comes to customer service our payment providers will exceed your expectations because they understand how payment services can affect your business whether it’s answering a question or resolving a technical issue. You can expect 24/7 in-house service and many times on a first name basis. Happy merchants want to stay with their provider and that’s exactly what you can expect. Compare rates and get a price quote today! Accept Credit Cards with ease.