One of the most frustrating things imaginable to businesses who utilize merchant services is when they are faced with paying a higher percentage rate on their credit card machine use than was advertised or promised. At best, this is misleading. At worst, this is a common industry selling credit card processing bait and switch pricing tactic. Why is it that so many merchant services providers charge more than the rate promised?
The Steadily Upwards Creeping Introductory Rate
Many times, banks and merchant services providers quote a low introductory rate to make the initial sale with businesses, only to turn around and slightly increase rates again and again, month after month, year after year. These providers hope that either their merchants will not notice, or will not be bothered to change services once they’ve already signed up for one. This is a common occurrence, and many businesses have been victimized by this coercive business practice.
What to Do?
What can you do about it? Well to start, if you have been with the same merchant services provider for a few years and have noticed your prices slowly creeping up, you should contact a reputable merchant services provider and have them perform an account analysis on your most recent statement. They should be able to identify where you have been overpaying, or where your current provider’s policies have put you at a disadvantage, and should be able to help bring more bottom-line profits back to your table. It doesn’t cost anything, and you could save hundreds of dollars a year!
The Kind Of Merchant Services Provider to Look for
In particular, look for a merchant services provider who has not raised rates in at least 15 years; this speaks to both their financial stability, as well as their commitment to helping merchants maximize their bottom-line profits. A great merchant services provider will be most interested in helping your company succeed, and less interested in generating hidden fees to fleece you with!
Hidden Credit Card Machine Fees
Most credit card transactions require a credit card machine. Oftentimes, a merchant services provider will either overcharge a merchant in order for them to use their “discounted” rate service, or they force the merchant to rent or lease a credit card machine at inflated rates as part of their contract. Both business practices are less than honest, and it leads to businesses overpaying for their credit card machine equipment. We recommend purchasing a credit card machine outright as the lowest cost solution.
Merchant Services Providers Escalating Multiple Rate Structures
Another trick providers use to make more money off of merchants is an escalating multi-tier rate system with what appears to be a low “teaser” rate, where some transactions qualify for a small rate, such as 1.2%, but then a majority of the other transactions are processed at a princely rate, often times as high as double or triple the introductory rate! Do not be taken for a costly ride with these tactics.
Raising Credit Card Processing Fees across the Board Despite Bank Increases in Only a Small Percentage of Credit Tiers
Do keep in mind that Visa, MasterCard, and other large credit businesses will increase or decrease small segments of the hundreds of credit card interchange fees at least twice a year, in April and October. These rate changes will never affect every tier equally, usually a few segments rise, and a few segments fall. Thus, if your merchant services provider is unilaterally raising all merchant services rates, that is usually a tell-tale sign of all those extra fees going straight into the pocket of the provider, while trying to pass the blame to the large credit businesses. Shame on them!