7 Questions a merchant should ask when shopping for better merchant account rates.
August 11, 2010 by Admin · Comments Off
Merchant Services Terms and Services, are never non negotiable. The providers want their customers to be happy and processing! There are many companies out there, member bank’s and Iso’s who want to process for merchants. It is best to be well informed, and know what you are looking for before shopping around for services. Here are a few key points one may want to look at or ask for when shopping around for better merchant account rates.
Firstly, one must realize it is not just the rate you are paying for, and also those rates are subject to industry minimums (interchange). So, when the rate battle is lost before it’s fought, there are other aspects of the service where one could save themselves some money before negotiating the final contract.
- Mid and Non Qualified transactions. The credit card companies charge the merchants different rates for different types of cards customer’s use. Naturally, the credit card companies issue more of these cards, so it is likely that the mid and non qualified rates is what one would be paying more often, so it’s on these specific rate fee’s where one is advised to bargain.
- Authorization and Processing fee’s. These fee’s are a reality. Every service provider will have either an electronic funds transfer fee, or push fund, essentially a charge for issuing transactions on top of the rate. This can be negotiated as it’s often chalked up as 100% profit for the provider. Asking for “zero” is never functional, but asking for something less than what is offered, is acceptable and this is one of the fee’s they can alter to gain your business.
- Statement Fee’s. Again, every provider charges something, even if it’s lumped into a Monthly Service Fee. And again, this is one of the 100% profit margins for the provider so, just as in our prior example, this is a suggested point of negotiation to bring down your monthly costs for merchant services.
- Monthly minimums. These are usually 10-20 dollars a month, and can be negotiated. It is less likely that they will able to do nothing, but 10.00 is an industry standard, one could draw upon any provider to cut the minimum down, but not out altogether, again, asking for nothing will get you nothing~!
- Rental/Additional Hardware fee’s. As a merchant, you should be either purchasing the terminal one time out right, or renting/leasing the machine depending on what is comfortable. In the instance of renting/leasing, there is room to request decrease in the price offered. When a terminal is purchased, be clear that there is no Imprinter fee’s or any other costs associated with monthly processing.
- Guarantee of Terms. The discount does not always lie in pricing alone. Be sure to negotiate any terms of service you are uncomfortable with. One can often get decreases in cancellation fee’s, de activation fee’s these do not save money up front, but rather provide a security blanket of sorts, knowing that no unexpected fee’s can creep up later.
- Early Termination Fee’s. No provider wants to get into an agreement, with the merchant asking about termination fee’s. The reality is, a merchant’s rates are approved under the assumption that the provider will gather a good 4-5 years worth of business, to make the rates justifiable. These terms are set by Visa and Mc and can still be negotiated. Again, like number 6, it is not money saved up front but rather security in knowing that they will not likely occur, and if they do it is affordable for you.
It is always best to address these issues in a calm tone, if you are dissatisfied with the offers, seek out another provider; there are enough that one of them will meet your needs!
The Top 15 Canadian Credit Card Processors
August 9, 2010 by Admin · Comments Off
There are many processors’ here in Canada, some are Member Banks and some are independently ISO’s. Here are the top 15 payment processing providers in Canada, starting with those associated with Member Banks. The list in in no particular order.
- Moneris – founded in 2000, it’s an extension of Bank of Montreal and Royal Bank.
- Chase Paymentech processing since 1985, extension of Scotia Bank.
- Global Payments in existence since 1970, CIBC affiliate.
- T.D Merchant Services – 1980 was when this member bank broke out to include merchant services.
- First Data Merchant Services, originating in 1988 as an extension of TD Bank.
- Elavon / Nova payment Systems – originating in 1991, they broke into Canada from the U.S, most well known for “Costco” processing.
- CollectivePOS – founded in 2001, Collective is a fast growing ISO, supported by Elavon and First Data for Merchant Services.
- VersaPay – beginning in 2005, fast growing providing all basic services, supported by Chase Paymentech.
- Cardex – starting in 1995 with affiliation to Global Payments.
- Tangerine – having grouped with Elavon for processing most recently, Tangerine was started in 1999, just at the cusp of deregulation.
- Monex – working with any of the member banks for support, Monex has been in business since 2001.
- Inkas Merchant Services – founded in 2001 Inkas works their services through Elavon and Open Solutions.
- First Canadian now Canmore – supported by Global Payments, they are fast growing in Canada, having begun in late 2005.
- Merchant Account Services – processing for 5 years, having started in 2005.
- Millennium Payment Systems – new in the industry, and fast growing.
It is best to do your “homework” before signing any contracts, this basic list can be a helpful guide in contacting possible providers.
The Critical Canadian Merchant Services Guide – Part 4
September 25, 2008 by Admin · Leave a Comment
Making Things Worse: Payment Processing Providers Use Ethically Deceitful Marketing Tactics
I have been disgusted with the unethical marketing tactics many merchant account providers have taken to secure more clients. I am seeing payment processing companies tread thinly on the legal line with misleading advertisements/flyers. Often important details are omitted, leaving merchants to discover hidden fees in their statements and then having to pay huge cancellation fees to break their agreements.
Many merchant account providers advertise below-cost rates, then turn around and pad accounts elsewhere with ridiculous back-end fees. They have chosen to play the game of “If they don’t ask, then we don’t tell.“
This is flat out wrong.
I have said this repeatedly: the companies that are playing this shady game are risking a lot. Merchants are consumers too and in this day and age-with the internet such an easy place to share personal experiences to potentially huge audiences-they have a means to fight back!
Look what I found after just a few short searches on some Canadian small business forums:
These are just a couple of examples of merchant accounts gone bad-really bad. There are hundreds of complaints found all over the internet where merchants are complaining about the same themes. For those companies that continue to try and make sales using misleading advertising, and by not sharing all the terms and conditions…well, let’s just say: their day of reckoning is coming.
I understand that there will always be disgruntled customers out there ready to complain at the drop of a hat. But these types of problems are not atypical: they are a common experience I have witnessed firsthand with so many merchants.
Why do these companies put their reputations and long-term credibility with customers at risk? Personally, I don’t understand this type of thinking or marketing!
A good chunk of my business is helping merchants cut their fees by switching them to new merchant accounts with competitive rates, because they were not explained the full details of the agreement they signed with the previous company.
Everybody understands there are costs to doing business and costs associated with payment processing. There is no need to hide fees and/or not to mention certain fees to merchants to secure business. All merchants want to know is what they are paying, so they can budget and price their products and services appropriately to generate a profit margin. A business owner cannot do this if they don’t know the true cost of their expenses. Am I wrong…?
All you want is good service with competitive rates, right?
It’s actually fairly easy to spot misleading advertisements when you know how. Let me share a secret with you that most small business owners do not know.
All the card processing companies have buy rates from Visa & MasterCard. Visa & MasterCard are publicly traded companies and have to post those buy rates. The buy rates are called “interchange.”
For example: all a merchant needs to do is search “MasterCard interchange rates in Canada” in Google and they should be able to track down the current buy rates for that card.
Therefore if a company is advertising well below the buy rates, then doesn’t it make sense that they are making up for it somewhere? These companies are not in the business to lose money. A payment processing company is not going to take a loss to secure your business, just like you wouldn’t sell your products and/or services at a loss.
Which brings us to…
