There's plenty of competition within the bankcard industry and unfortunately, many merchant account providers have turned to "smoke and mirror" techniques to make their processing costs appear lower than they actually are.
Many business owners treat a merchant account as a commodity and think that they should make their decision strictly on rate.
You might look at credit card processing as a commodity like any number of items you use in your business every day. But, it's a commodity only for as long as it works properly. Anyone who has accepted electronic payments for any length of time will tell you that despite the sophistication of today's systems things can go wrong. Money can be lost or misrouted; customers can be billed incorrectly, clients can and do dispute sales etc. It's times like that when you appreciate the person who set up your account at the beginning is the same person who'll make sure that your problem is resolved quickly.
Unfortunately many sales reps representing merchant account companies these days have no vested interest in your success or servicing your account as they operate as agent/brokers and surrender your account to processors who are far too large to provide quality service and support. In fact many will take less long term recurring revenue for an upfront commission and will blatantly lie about the rates you'll end up paying as they have no future accountability to you. For example a common processing quote I've been seeing is 1.1% for card present sales & 1.99% for internet and phone orders.
I'll admit both are great rates and if I could get a merchant account with rates that low why would I waste my time looking at other offers?
Unfortunately for the merchant this is a common trick designed to get your attention so that you'll believe you've been quoted the lowest possible rate thus eliminating other potential suitors. The truth is, these types of rate quotes are only for supermarkets or visa check purchases and not traditional sales.
With the advent of rewards cards processors using these tactics are willing to take a small loss for the transactions that rarely hit 1.99% as they know they will make it up by adding hefty surcharges for rewards based transactions, business cards and other qualifiers merchants typically fail to supply to keep internet and phone transactions in compliance with the processing associations.
What is not readily disclosed, however, are a myriad of additional items, such as dues and assessments or rewards surcharges that offset any savings you may have obtained from the lower rate. These hidden charges make the cost of the seemingly low rate offer much higher than you thought they'd be.
So the next time you see an attractive rate quote take a closer look to see where they will charge more in other areas so you don't get burned and leave money on the table.
