Some of the “un-mentioned” fees include:
Over Limit Fee
Under Limit Fee
Card Not Present Surcharge
Address Verification “Doesn’t Match” Surcharges
Savvy merchants calculate their “effective rate” by adding up the fees on a monthly statement, dividing the total by their statement’s credit card net sales and multiplying that by 100.
Deceptively low rates. Salespeople can offer a rate lower than a merchant is qualified to receive. That happens in tiered pricing where the agent quotes the merchant the debit card rate without mentioning downgrades for transactions that don’t qualify. We’ve all seen ads offering processing at 1.39%. Merchants don’t know the right questions to ask. A merchant’s swiped credit and rewards card transactions should generate a large difference when the effective rate is determined for the month.
Interchange Plus – Interchange Plus Pricing can be good if it’s set up correctly but it’s usually padded with additional fees. Interchange Plus works like this: A processor offers you .50% over the interchange rates Visa, MasterCard and Discover charge them. This allows them to advertise a rate of only .50% but the true cost is really closer to 3% – 4%. For Example: There is a phone company advertising a $14.95 per month five year high speed internet access service on TV right now. The problem is the $14.95 is their cost and when you add in all the taxes and other fees the true cost is close to $50 per month. It’s 100% legal but not the whole picture!
Phony offer of $500. The agent tells a merchant that, “If I can’t save you any money on your monthly contract, I’ll give you $500.” What the agent really wants is a look at the current contract. No matter what the document says, the agent can vow to beat the rate.
How? By failing to mention that some of the fees that will show up on the statement.
Also consider a company paying straight interchange with no other fees. An agent could offer to pay $5 a month just to process with his company for the next two or three years. It would cost the processor $120 to $180, plus the cost of the setup, but it would eliminate a $500 payout. But no merchant would even switch for $60 a year savings, so the proposal is just to avoid the payout.
“Free” terminals. So-called free terminals are really loaners that merchants lose if they switch processors. If they change merchant-services providers, merchants have 10 days or so to return the equipment or else the acquirer debits the full amount specified on the terminal agreement form.
Such terminals don’t even qualify as “free use” equipment because they general come with minimum requirements for rates, monthly fees, monthly minimums and other fees.
ISOs offering free terminals sometimes include a clause on the forms merchants sign that specifies a 50% premium above the terminal’s “sale price” if the merchant fails to return the equipment.
Claiming to work for card brands. “I work directly for MasterCard and Visa,” some agents assert.
That can put merchants at ease but opens the door for scams. Warn clients about agents that make that claim. Including this line anywhere in a sales presentation should scream to a merchant that either, “I am too new to understand why this is wrong,” or “I am going to stick you because you’ll let me.” Either way, the agent should be shown the door.
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