Choose The Right Merchant Account Service Provider By Avoiding These Common Mistakes

Why repeat the same mistakes other small business owners have made in the past when hiring a Merchant Account Service Provider?!


Most small business owners lose the “rate game”, calling all the merchant account service providers in the yellow pages and choosing the one that states the lowest discount rate will not necessary secure you low rates.

Would you play a high stakes one-on-one basketball game with Shaquille O’Neal? Of course not! You wouldn’t because he is a ‘pro’ and knows all the tricks in the book to win at basketball. Small business owners who attempt to negotiate debit/credit card processing fees with a merchant account sales ‘pro’ is like trying to beat Shaquille O’Neal at a one-on-one basketball game. You can guess who the winner will be…?

The small business owner almost always loses because they do not understand the intricacies of rate structures and how to look at the over-all payment processing service program. Click here to see just a few of the different fees that can be associate with using payment processing providers.


Not all merchant account providers are created equal. Price is not everything. Small business owners must also consider:

– Service

– 24/7 Tech support

– Equipment

– Software

– Warranties

– Training on proper protocols for using services

For example, one company I know offers a very competitive discount rate program, but has major flaws with the program. At first glance it seems like a good choice to make, but if the business owner had the skills to delve a little deeper they would notice that this program would probably not be for them. Let’s look at this example:

This company (I can’t say the name, because I am not looking for a law suit) offers every business:

1.66% on Visa and MasterCard

10 cents per transaction

$26/month POS Terminals

If you look a little closer you will see in the fine print that this is an introductory rate, at which point after 6 months of processing they will give your business the “real” rate.

There are a few hidden fees, statement fee, admin fee, and a annual recurring membership fee.

That rate is only on “qualified” transactions, which means ‘card present transactions’.

There service hours are 9am – 5pm.

They offer no lifetime warranty on the POS terminal (just the standard 1 year manufacturers warranty , which is standard by law in canada) and if it the POS Hardware does break down and has to be fixed, it needs to be shipped to Texas to be repaired – probably taking 2 weeks before you have a working POS Terminal in your business.

How well would your business perform without a working POS Terminal in your business? How many sales would you lose?


This above example is just one of many, many, many sneaky marketing ploys I have seen to set-up to win merchants business. The solution is to use the services of a merchant account specialist who will help you make the best possible decision for your businesses payment processing needs.


We touched on some of this in the above example, but let’s dissect this in a little more detail.

Low Ball Deals – Ask yourself is it too good to be true? Is one company offering much lower discount rates then any other company – then it is probably not cheaper. Remember, don’t compare ‘apples’ to ‘oranges’. Some companies will offer low introductory rates to capture business only to raise rates once they have secure your business into a contract.

It really isn’t that hard to figure out, a merchant account specialist knows the wholesale buy rates that credit card processors pay (it’s called interchange) and if a credit card processor is offering lower rates then what it costs them then they would not be profitable. How long do you think a business will last losing money…? They are either going to raise your rates or they are off-setting the lower rates with back-end hidden fees.

Hidden Fees – What you do not know can hurt you. Many Debit/Credit Card Payment Processing Providers are very good at providing an illusion of being competitive, but make up for it many times over by sneaking in tons of ‘nickel & dime’ fees on the back end. These could compile of: monthly warranty fees, administration fees, monthly/yearly membership fees, added value fees, system access fees, monthly maintenance fees, etc. Companies can be very creative when comes to naming bogus monthly fees.

Free Equipment – Let’s keep this one short. Nobody gives anything for free. I believe that is enough said.

Choosing a Payment Processing Provider is a serious decision that you want to make sure you have crossed all your “t’s” and dotted all your “i’s” before committing to an agreement. Most Companies volume runs through Debit/Credit Cards and most payment processing costs are 2-5% of that volume (when all said and done), so making a good decision is important.

Therefore, in order to evaluate the cost effectiveness of any Debit/Credit Card Payment Processing Provider, you need to consider ALL the fees and charges, not just the discount rates. It is a benefit to have a professional merchant account specialist to assist you with making the correct decision for hiring your payment processing vendors.

Matthew Hunt is a Merchant Service Specialist. He has been involved in the Canadian Payment Processing [] Industry for over 3 years. Matthew has helped hundreds of Small Business Owners connect to the ‘right’ Payment Processing Systems while capturing low Merchant Account Rates. For more info on Matthew and Merchant Service comparison quotes go to: