Merchant Accounts – 6 Essential Questions You Must Ask!
For a first time entrepreneurs it can be very over-whelming trying to get all the administration faculties together. There are just so many things to know and it is virtually impossible not to make some poor decisions due to a little naivety.
Setting-up Merchant Account Services is no exception to this rule. Many merchants have described getting set-up with payment processing services to be one of the thorniest administration details to have set-up.
It does not help that most Merchant Account Representatives are not very good at explaining all the expenses that will be associated with your payment processing services, thus resulting in some ‘wide eyed syndrome’ for most merchants at the end of the month when looking at your bills.
This article will deal with the 6 essential questions you will want to have answered before signing on the dotted line:
1. What will my credit card discount rate be for all types of cards? Make sure you ask about: consumer cards, corporate cards, business cards, travel cards, international cards? Most companies tend to only initially quote you the consumer card rate and do not mention the other discount rates.
2. What will my credit card discount rate be for each: Qualified (means card present or face to face transactions on a retail point of sale terminal), Mid-qualified (means not swiped across the point of sale terminal, but card was present, usually meaning you had to use the old knuckle buster, and finally Non-qualified (meaning card not present for the transaction – MO/TO or known in the payment card industry as mail-order/telephone-order). Rates can vary drastically between these three different types of transactions.
3. What are my early termination fees? Most merchant account agreements run for 3 years and usually have a $200-$400 early termination fee. These agreements also auto renew on their anniversary unless you send them written notice with 30 days of notice.
4. What will my minimum processing fees be? Most credit card processors will have at least a $10 minimum processing fee for each credit card, but can be much higher so be sure to ask. This means if your fees do not equal this amount every month then you will be required to make up the difference.
5. What are the monthly administration fees? Many card processing providers like to add what I call the nickel & dime fees in. These are the $10 a month admin fee, $10 a month statement fee, the $10 a month added value fee, etc. Be sure to ask about any hidden monthly admin fees that are not included in your initial quote.
6. This is one of the most important question and usually most over looked question – What are your service hours and customer support hours? If they only offer 9-5 then this will not be very good to if you are in the restaurant business and you need assistance at 1am in the morning. It will not matter how good your rates are if there is no service. The best way to test this out is get a hold of the support lines and call them several times through the week at different times of the day to see if you get a ‘live operator’.
If you have these 6 questions answered then you should be in pretty good shape to make an educated decision on your merchant account service provider.
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