When you’re comparing merchant account and card processing services, it’s hard to know whether you’re getting the best deal as so many of their prices opaque. The reason why many do not publish their rates as they depend on many factors related to the volume of sales, the average transaction size, type of business, contract length and current targets they are trying to meet which may encourage reduced rates.
Once you shortlist a few companies you need to speak to them in order to find the following if it is not obvious from their webisite:
- Transaction fees: This is what you’ll be charged every time someone pays you by card or using one of the online services you’re signed up to. This is normally set as a percentage for credit card transactions (between 0.5% and 4%) and as fixed fees for debit card ones (between 5p and 50p).
- Minimum Monthly Fee: Some providers will set a minimum monthly fee, which is the value of transactions you’ll need to make within a month. If, for instance, your minimum monthly fee is set at £50 and you only make £30 in card transactions for a particular month, your provider will charge you £20.
- Chargeback Fee: Chargebacks are the bane of the merchant services industry, as they could lead to losses for banks if it turns out that their merchant clients are engaged in unethical business practices. Thus, providers are stringent with their chargeback policies. If you get a chargeback, you will not only be charged the amount of transaction, but an extra fee as well. Paypal, for instance, charges £14 per chargeback.
- Contract Length & Early Termination Fee: It is very important to look into this if you’re going to be tied down to a contract with your provider. Contracts can last between one and three years, and a number of providers will make it difficult for their clients to get out of these contracts by charging exorbitant early termination fees.
- Hidden fees: Hidden fees are, well… hidden and you’ll do well to spot them – one reason we like to look into the background of each company.
Here are some tips on how to choose the best payment services for your business:
Know what you need (and don’t): Aside from choosing payment services that provide everything you need, you want to make sure you’re not paying for anything you don’t need.
Do your research: Always do your research on payment service companies before dealing with them.
Be wary of third-party sales teams: Be wary of third-party sales teams and try to speak to companies directly.
Compare quotes: Get quotes form multiple providers and carefully compare them.
Don’t be afraid to negotiate: You’re well within your rights to negotiate with these companies – especially if you’ve been given a better price elsewhere.
Know your contract: Make sure you read and understand everything in your contract before signing anything. Get a lawyer to review things for you, if necessary.
The merchant account services and payment processing industry has a bad reputation for hidden costs, dodgy contracts and all kinds of headaches. In many cases, this is completely justified but so many issues with these companies would be avoided if contracts were fully understood before merchants sign them.
Yes, contracts are made overly complex to catch people out but you have to be sceptical about the terms of any contract before you sign on the dotted line – especially in this industry.