Choosing a merchant service provider is critical to your success in accepting credit card payments. You must ensure when finding a talented merchant service provider that it is legitimate.
Many scams are floating around today’s merchant services industry. The worst part is that it doesn’t take much for people to fall for these issues. But it isn’t hard to avoid these problems, as you can use a few points to help you avoid merchant services scams.
Wrong Rate Quotes
Some merchant service providers will offer the wrong rate quotes when you ask for assistance. You might be told you could spend a low rate on transactions. Some companies may argue they have the most affordable service rates. They could give you comparisons on what they charge versus others.
The low rate someone promotes may entail qualified charges that people make with debit cards or credit cards that don’t link to reward programs. The actual rates you’ll spend on transactions may be higher, as you might still accept reward cards that charge extra.
In short, you’re being encouraged to sign up for services at a low rate. But that rate is the lowest possible one you could handle and not necessarily something you’re always going to handle when accepting payments. You will likely spend more money on whatever you wish to use in most situations.
Wholesale Processing Offers
A merchant service provider may offer a wholesale processing solution if a company sees you as running a low-risk business. The concept suggests you could qualify for lower interchange rates because Visa and MasterCard and other card networks interpret you as a low-risk business.
The truth is that these networks cannot identify specific businesses as low-risk entities. Credit card processors are responsible for dictating whether your business is risky. You may be in a high-risk field because your industry is subject to more chargebacks. Some credit card companies may still increase the rates for high-risk transactions, but each one will have unique rules for what works.
The concept of “wholesale processing” is also extremely vague. You might get the impression you’ll pay less in processing charges, but you might still spend the same as everyone else. The processing rates are still the same, but you’re being led to believe they aren’t.
Negotiations For Lower Rates
Some processing teams may also claim they can negotiate lower rates for you by talking with the card networks. They can claim that they talked with Visa and MasterCard and will give you lower processing rates thanks to their work.
This scam is common because processors want people to think they have authority over whatever charges develop. But the only way anyone could negotiate lower rates is if a business brought in billions of dollars in sales each year. The most powerful entities can negotiate for lower rates, but most entities cannot do the same. The odds are it won’t work for you.
Leasing Deals
You might have a chance to lease POS equipment in some situations. Some providers will encourage you to complete a lease, claiming it is more cost-efficient than buying new equipment.
But leasing equipment is worse than if you were to buy new items altogether. A lease can cost several thousands of dollars over a few years. You’re not going to be allowed to keep the equipment, plus you may have limits over what you can do with whatever you’re leasing. Purchasing your equipment altogether is a better idea, as you will likely pay thousands of dollars less in costs, plus you’ll keep your equipment and do anything with it so long as it supports whatever system you utilize.
The Salesperson Disappears
Another scam to note entails the salesperson being overly pushy or interested in helping you find something. That person might tell you everything about the service and make it sound as appealing and inviting as possible. But the salesperson might also hide some things from you, or that someone might not be forthcoming surrounding some questions you wish to ask.
The worst part of the issue is that the salesperson might not be easy to reach after you sign up for a service. The person will focus more on trying to get you to sign up with a service. That someone will end up bailing after you sign up, and it will be hard to ask that person for help anytime soon.
How Can You Avoid These Problems?
Be cautious when looking for merchant service providers. It doesn’t take much for people to fall for scams when looking for convenient services.
You can use a few steps to help you avoid these issues before they can become a significant concern:
- Ask about whether you can purchase equipment for your processing needs or if you can get your current equipment programmed to fit a system.
- Get references from a business’ other customers before signing up for services. Look at what other people are saying about a business to ensure you select something that fits your needs.
- Look at the support team the company offers. A scam business might not have an easily accessible customer support staff.
- Watch for the current interchange rates surrounding each card network and what MCC your company supports. You might spend more money if you’re in a certain field. You can review what the rates are to ensure you’re getting a suitable offer when applying for something.
- Don’t rush your way into an agreement with anyone. Choosing a merchant service provider can be challenging, what with there being so many options. You can always compare choices to see what fits your needs.
Watch what you’re doing when looking for merchant services. Be certain when finding a solution that you know what you’re entering into and that you know what to expect from a provider. Your work should be about ensuring there are no problems with your service and that you’re going to make it work well.
