subject: Common Misconceptions Regarding Merchant Accounts [print this page] There are many misconceptions out there regarding merchant accounts. Sometimes these misconceptions arise because a business owner does not fully understand their account, or many times account misconceptions are simply passed on word of mouth rhetoric. Here is a look at some common merchant account misunderstandings and how you can overcome them.
Providers Hide Fees
By law, providers must disclose all merchant account fees and rates to the merchant. These rates and fees may not always be easy to read when they are part of a 25-page contract, but they are there. Take the time to read every page of your merchant account agreement contract. Ensure you understand all the fees and rates listed. If you have any questions, ask your provider. They should be more than willing to go over their pricing with you.
Contract Terms
Many merchants seem to think that when their contract term is up with their current merchant account provider, that their agreement automatically goes month-to-month. This may not be the case. In most instances, when a merchant account contract expires and there is no new agreement drawn up, the original contract term is reinstated. Ask your current provider what their contact term policies are. As your contract term end dates nears, take the time to speak with your provider and update any changes to your account (volume, average ticket, etc.). This is also a good time to negotiate pricing.
Advertising Debit Swiped Rates As A Teaser Rate
Don't be fooled when looking at those low qualified rates you see advertised. Those low rates are most likely the debit-swiped rate. Credit card swiped rates are higher than PIN-based swiped debit transactions. When comparing rates or negotiating with your current provider, ask to always have both the debit card and credit card rates quoted to you. A swiped credit card cannot be processed at a rate as low as 1.03% or 1.19% like many companies would have you believe in their advertisements.
Is The Free Equipment Yours To Keep
Credit card terminals, printers and pin-pads that are offered to a merchant for free, are most likely not for the merchant to keep. Free equipment is "loaned" to the merchant while the merchant maintains an active agreement with the provider. Once the agreement is terminated (by either the merchant or provider) the free equipment must then be returned to the provider. Failure to do so or returning damaged equipment could result in the provider recouping their equipment cost directly from the merchant's credit card funds.
Knowledge Is Power
Merchant account agreements have a lot of information, which can overwhelm and confuse even the keenest of business owners. Information may be different with each provider or source. In fact, most business owners learn the ropes through experience. But by reading the agreement and asking questions, merchants can avoid costly account misconceptions and also help in educating fellow business owners.
