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7 Ways to Keep Your Credit Card Processing Company Honest

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7 Ways to Keep Your Credit Card Processing Company Honest

What do you think is fair to be able to expect from a credit card processing company? Do you have any expectations when that sales rep that walks in the door of your business?

If you’re anything like most business owners, you don’t think much about it at all. When I was first tasked with figuring out how to process credit cards for my business, I just did a simple online search to find a provider that could make it happen. I started by looking at a few of the names I had heard of before and then the rates started to appear. Ouch.

Here I am a couple of years later, and I have the privilege of writing articles for a credit card processing company I believe in. I know more today than I knew when I signed up with my first credit card processing company. Let’s save you from the headaches that I experienced when I was first looking.

I thought all merchant service companies were the same. Having my own business was new to me, and I just didn’t know what I didn’t know. It turns out that I would pay for that quite handsomely over the next couple of years.

Is Your Credit Card Processing Company Honest?

This is why I created this list of things you should expect from your credit card processing company. If you’re with a processing partner who doesn’t offer the following, you can do better. It’s time for you to find a better business partner in the merchant services area.

It seems to me that this should be a given, but it’s rarely the case in my experience. I’ve had companies hide fees on me, change rates after they were “locked in” and more. I expect a processing company to tell me what the fees are going to be and stand by their word. I don’t have time to micromanage my processing account each month. It turns out that’s actually what most merchant account companies count on.

They bank on the fact that most business owners won’t check their statement regularly. This is where they begin to change things after a few months of processing. If you’re dealing with a service company that won’t be honest with you, why? it’s time to find one who will.

Look for guarantees, rates that truly lock in on the day you sign and won’t change. Look for money back options and make sure there isn’t an exit clause in your contract. The best credit card processing companies shouldn’t have to force you to process with them.

Holding you in an annual contract for 3 or 4 years should be a red flag. If they have to make you sign a contract to work with them, there’s probably a reason. Most likely it’s because most of their clients want to leave earlier than 3 years, and that’s just not a good sign.

Find a company where you can work with month-to-month contracts. With a monthly contract, your processor can’t monkey around with your rates. If they do, you can leave. That’s the kind of processor you’re looking for.

#1 – Straightforward Pricing Structure

One thing you should look for in a new merchant services company is a crystal clear pricing structure. If you’re looking at a provider and you can’t understand their pricing, keep looking. Pricing structures that are unclear are not in favor of the small business owner.

Here’s what you should be able to expect to know before you sign a contract.

  1. What is their pricing for qualified cards? This is most often the only pricing structure that you will get from a company. This is not the end all though, you need to know more than just their pricing % for qualified cards. Did you know that most of the cards that you will likely process aren’t going to be of the qualified type? Any card with a rewards program like cash back or airline miles aren’t qualified cards.
  2. What is their pricing for mid-qualified cards?
  3. What is their pricing for unqualified cards? This is a very important number to understand when you sign with a merchant processor. Unqualified cards make up most of the credit cards that you are going to process. Many un-reputable processors will hide that this rate even exists. They’ll charge you a different rate for unqualified cards. You’ll find that the rate they initially quote you isn’t the rate you’re getting. When you find that out, you’re already locked into a long term contract and there’s nothing you can do about it. It’s hidden in the small print of the contract and you’re stuck.
  4. What is their pricing for debit cards? Debit card pricing is completely different than credit card pricing. Do you ever see a rate quoted where a company says that they can get you rates of 0.05%? Seems crazy low, right? It’s actually truthful because the cost to process a regulated debit card is 0.05% . If that is the rate that they quote you for everything, they’re hiding something. The cost on credit cards is around 1.5% at least per transaction. 0.05% rates don’t exist anywhere outside of the debit card. This is a powerful thing to know when talking with a processor on the phone.

#2 – No Contract Structure

When selecting from a list of top credit card processing companies, look for one that doesn’t have any kind of annual contract. I can’t tell you how many friends of mine have signed a 3 or 4 year contract without knowing it. The rep promised them the world, but most of it turned out to be skewed versions of half truths.

There are credit card processing companies that do month to month pricing. These are the ones that you want to work with. You of course will need to check all the other things on this list as well.

Annual contracts are a complete load of garbage. If the credit card processor you’re talking with can’t offer you month to month processing, it’s time to move on.

#3 – Positive Social Proof

When selecting a processor, remember that you’re essentially selecting a business partner. This is the company that you’re going to be trusting with all your merchant transactions. You want them to be reputable.

There are many ways to check if a company is above board, but one great way is to check their social proof. Check their company website for reviews from actual customers that you can prove exist. Don’t just read the comments that are supposedly from customers on the site. Check for actual clients that you can track down and prove are real and said those things. Here are a few great places to look for actual social proof.

  1. Google Business Listing – If you do a google search, they should have a Google business listing. Attached to that business listing should be many reviews from their customers. Do they have at least 5 reviews in a row that are positive? If not, there are many other credit card processors and it’s time to move on.
  2. Bing Reviews – Like Google above, this is how the business reads through Bing’s listings. Check to see what actual clients are saying about the company. Look to prove that they exist and aren’t just friends posting to boost a friends business account.
  3. Yelp – If you’ve spent any time on Yelp.com, you’ve seen that it’s a review machine. People are constantly posting on Yelp about their experiences with companies across the globe. The company you’re looking into should be on there. Check to see what people are saying and make sure that they’re legitimate.
  4. Better Business Bureau – The BBB keeps records of complaints about each business and gives them a rating. If the BBB sticker is on their website, click it. You should go to the BBB site to verify what they’re saying their rating is. If you can’t click on the sticker on their website, it’s fake 99% of the time. Anyone can grab a picture of a BBB A+ rating and stick it on their website. Only the real business with an A+ rating can show a sticker on their website and then have it prove itself by showing you on the BBB website. If you see a sticker you can’t click on, check them on it. It might just be a fake.

If the above check out, you’re looking at a company that is worth having a further discussion with. Remember, it’s not just one of these areas that makes a great processing company. It’s a combination of them all, and believe it or not, they’re out there.

#4 – Amazing Customer Service

Customer service isn’t always the first thing we think about when we sign up for a service. We often want to talk price and options first and assume customer service later. When it comes to merchant processing, it pays to check this out first.

Almost every call that comes in to Dual Payments wants to talk low rates. Hardly any of these business owners ever ask about customer service. They focus on rates and contracts and just assume that our customer service is good.

Credit Card Processing isn’t a set it and forget it industry. You need a merchant provider that engages in your daily sales process helping you watch for red flags. When you have a billing question, do you speak to someone who knows the business? Do you get routed to a call center overseas? Is it possible to talk to the sales rep that signed you up for service? Do you have a dedicated customer support representative?

Before you get started, it’s important to know what happens after the ink on the contract has dried. (Which, see above… No contracts, remember?) Find out who you would talk with should you have a question about your account. What will happen when a chargeback occurs?

They should be able to tell you exactly what will happen when you call and who you’re going to talk to. Don’t settle for an overseas call center. Don’t sign with a business that only keeps office hours and doesn’t have an after hours support line.

#5 – Chargeback Support

When it comes to customer support, the chargeback is a perfect litmus test. A chargeback is when a customer disputes a charge that your business has placed on their credit card.

For example, imagine that a customer has one of your service people out to repair an air conditioner. The trip charge and parts for that particular charge came to $379 and the customer put it on his charge card.

That customer has up to two years to initiate a chargeback. (Timeframe depends on the card issuing bank.) This is where they basically say that they didn’t authorize this charge. They are telling their credit card provider that they refuse to pay the fee. Now it’s up to you the business owner to prove that the customer authorized the charge and signed for it. Keeping great records as a business can really help here, but so can having your merchant processor in your corner.

If you have a great credit card processing company, you will have an advocate in your corner. You want someone that you can call up on the phone and have conversations with about how to handle a chargeback. A good processor will help you know exactly what you need to do.

There is a limited window where a business can reply to the chargeback. It’s important that you know what to do and when. With such a limited window, you want someone who is going to be monitoring things on the back end that can help you be proactive.

#6 – Reasonable Equipment Costs

One question you should always ask when looking for a new merchant account is how much the equipment will be. There are no standard costs for processing equipment. If you’re charged more than $400 for a terminal, you’re most likely paying too much.

There are some terminals that can cost your merchant services provider around $200 each. If you’re getting one of the less expensive terminals, you shouldn’t be paying $400 or more.

If you’re looking into a point of sale system through your merchant processing company, it brings a new set of questions. Ask if there are any monthly module fees that go along with it.

For example, I know that the Clover system is a little less expensive than other solutions. Their point of sale modules are about $60 per month per module though. It’s not hard at all to rack up a $100 – $150 per month module fee. This makes the Clover system one of the more expensive options out there.

Remember that it’s not all about the lowest priced system, but rather all about the total cost. When it’s all said and done, how much will you pay per year?

If you’re working with a credit card processing company that offers free equipment, look into it. Some merchant processors want to work with you badly enough that they will take care of the cost of the terminal or point of sale system for you.

Know that they are going to end up paying for that terminal or POS system over the life of your account. You can expect a little higher rate or some type of fees to make up the difference. This is a way that you can include the cost of your processing equipment in the small fee that your merchant provider gets from your transactions.

Is a terminal lease a good option? The blanket answer is no, but I do know of one exception. If you’re looking at a terminal that is a regular old terminal that accepts credit and debit cards along with near-field payments, you shouldn’t be wrapped up into a lease. If you’re looking into a terminal that is equipped with a convenience fee calculator built in, they’re usually more expensive and a lease can be a much more effective option to keep from having to shell out a lot of money at once.

#7 – Supports all card companies on one statement

If you’ve been in business for 2 or 3 years, you’ve probably been getting multiple statements. (Most likely Visa and MasterCard in a combined statement and American Express in a separate statement.) This doesn’t have to be the way it is any longer. It is possible now for everything to come in a unified statement to simplify your bookkeeping.

American Express has created a new service called OptBlue. Hopefully your preferred credit card processing company is taking advantage of this. OptBlue allows all your credit card fees to be sent to you on one statement. Your credit card services provider just sends one piece of paper per month.

What used to be multiple statements for each card provider is now one. If you’ve never gotten separate statements, this is a big deal.

Make sure that any company you use offers OptBlue from American Express. There’s no reason to have separate statements from American Express.

Opt Blue also comes with a lower rate for accepting American Express cards. Who doesn’t like lower rates?!

Conclusion:

There are great credit card processing companies available to the small business owner today. Whoever you decide to use, make sure that you run them through this list before you sign on the dotted line.

If they can’t do any of the above, ask them why. If their answer isn’t convincing, move on to another provider. There’s no reason to settle for a less than stellar relationship with your merchant services company. You deserve a great credit card processing company. Put your choice through the ringer and make sure you come out with the best merchant services provider for your business.

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Example of High Risk Merchants

  • 1-900 Phone companies – If you’re the type of company that charges people to have a chat on the phone, you’ll be considered high risk.
  • Adult Bookstores – Clearly a part of the adult entertainment industry, and an easy mark for the high risk tag.
  • Adult Entertainment – Any business labeled with the “adult” descriptor will automatically be assigned a high risk status.
  • Adult Toys – As “adult” is in the name, it’s an easy target for association with the adult entertainment market.
  • Airline Industry – Due to cancellations on high ticket purchases, this will put your airline company in the high risk category
  • Amazon Stores – By having a high rate of return, Amazon stores are seen as high risk.
  • Ammo Sales – Association with the weapons industry guarantees high risk status.
  • Annual Contracts – Any time an annual contract is involved it can be considered highrisk because most consumers forget they signed up and chance of chargeback can be high.
  • Antiques – With a high average ticket per item, antiques are considered a risky merchant type.
  • Astrology – The study of the celestial bodies and the influence on human affairs can be a chargeback target if customers feel like they aren’t getting the answers they want.
  • Auctions – Because of the nature of bidding on a product and not having a set price the risk level goes up.
  • Autographed Collectables – There is almost always a question as to whether an autograph is authentic, and therefore chargebacks are much higher in this industry.
  • Automotive Brokers – Brokers of automobiles have a very high average ticket are are therefore of higher risk.
  • Bankruptcy Attorneys – Since the people who are working with bankruptcy attorneys are usually in financial trouble, the odds that a payment would be charged back is higher.
  • Betting Services – In many states betting is illegal but for the legal states betting with a credit card has huge chargeback implications.
  • Brokering – When a third party is involved with selling a product the risk level goes up ten fold.
  • Business Loans (Merchant Cash Advances) – Loaning money is always risky, but with business loans and startup lending, high risk is present by the nature of the business.
  • Casino – Just like a betting service, if a customer gambles with their credit card the chargeback rate sky rockets.
  • CBD Products – CBD itself poses high chargebacks because of the legitimacy of the product and the health benefits promised.
  • CBD E commerce – CBD E Commerce has twice the charge back of retail CBD because many consumers don’t feel like the product they receive gives them the benefits promised.
  • Check Cashing (Check Processing) – The level of fraud in check cashing and cash advances is what gives this industry a higher risk consideration.
  • Cigarettes – With higher levels of risk for theft and criminal activity, cigarette sales are deemed high risk.
  • Collection Agencies (Collection Agency) – Many banks see collections as an unsustainable business model that is many times unreliable.
  • Collectible Coins – A higher level of chargeback in this industry gives it a high risk tag.
  • Collectible Currency – Due to the level of inauthentic collectibles, the risk of chargebacks are much higher with collectibles.
  • Copyrighted eBooks – When someone sells something copyrighted without permission many legal issues can arise.
  • Coupon Programs – With many coupon programs the coupons expire and once they expire the consumer wants the money back they spend.
  • Credit Counseling – Due to their clients usually being in financial problems, this industry is fraught with non-payment and fraud.
  • Credit Protection – Most people that need credit protection are bad with money so chargebacks abound.
  • Credit Repair – If a consumer needs credit repair then chances are they are a high risk for chargebacks.
  • Currency Sales – Many businesses that exchange currency do it at incorrect rates hence more chargebacks.
  • Dating Services – Dating is a volatile industry, and is also lumped in with the adult entertainment industry, making it a high risk account.
  • Debt Collection Services – As the collection of debt isn’t always possible, this industry retains the tag of risky.
  • Debt Consolidation Services (Debt Consolidators) – Consolidating debt is a challenging business and as debt is usually the problem, it’s seen as unsecure from a payment perspective.
  • Debt Repair Services – Since the clients of debt repair services are usually having financial challenges, it makes this industry seem a higher risk.
  • Discount Health Programs – Many people don’t feel they are really getting a discount so they try to get their money back and if they don’t the chargebacks sky rocket.
  • Discount Medical Care Programs – Just like the discount health programs if they don’t save the consumer wants their money back.
  • Drug Paraphernalia – Anything that is associated with the drug trade is considered high risk. Offshore merchant accounts are commonly used for this type of business.
  • E Commerce – As the source of the payment is unverifiable at the point of sale, any transaction without the card present has a higher risk of credit card fraud.
  • Ebay Stores – Many people sell items that aren’t as described so chargebacks can be an issue.
  • Electronic cigarettes – much like traditional cigarettes, e-cigarette sales are also deemed high risk.
  • Electronics – This industry has a much higher ticket compared with many other businesses. A chargeback for a $3,000 tv or two and your account can be in jeopardy rather quickly.
  • Escort Services – This is deemed a part of the adult entertainment industry and therefore needs a high risk merchant account and payment solution.
  • Event Ticket Brokers – If a customer buys a ticket and doesn’t use it they feel like they can charge the transaction back.
  • Extended Warranty Companies – Warranties are rarely used so people try to charge back the money that has been spent paying for them.
  • Federal Firearms License Dealers – Any organization associated with guns or firearms is automatically considered in this category.
  • Fantasy Sports Websites – Just like gambling, if a person starts to lose too often they try and charge back the transaction.
  • Finance Brokers – The entire financing industry is risky. By simply extending credit to other individuals, this business is betting that a majority of them will actually pay what they say they will.
  • Financial Advising/Consulting – The high risk tag on financial advisors isn’t about the advisors or their firm. It’s about the clientele and their current circumstances.
  • Financial Loan Modification Services – Due to a clientele in financial struggles, the high risk term is applied to any payments in this industry.
  • Financial Planning – Anything that includes risk for the consumer can have consumer implications with chargebacks.
  • Financial Strategy – Another risk and reward category, if money is lost, consumers try charging back making this a high risk industry.
  • Fortune Tellers – When a person doesn’t hear what they want to hear, or what is told doesn’t happen, the fortune teller can receive huge chargebacks.
  • Furniture Sellers – High risk only when its custom furniture.
  • Gambling – If money is lost the chargebacks rise.
  • Gaming – Chargeback levels skyrocket when consumers don’t win.
  • Get Rich Quick Programs – It’s rather common in this industry for an individual to purchase the training and then chargeback their purchase saying it didn’t deliver on what was promised.
  • Google Stores – With a high rate of return on their items, Google stores are considered high risk.
  • Gun Sales (Firearm Sales) – The gun and projectile industry is automatically associated with high risk credit card processing.
  • High Average Ticket Sales – With any high average ticket, just a couple of chargebacks can mean a massive shift in how risky the account is deemed by the processor.
  • Home/Vacation Rentals – Many issues with chargebacks can take place if the consumer decides not to travel.
  • Horoscopes – Many people believe this is hocum so will chargeback transactions.
  • How To Programs – A common practice in this industry is to purchase the program and charge it back with the description that it didn’t deliver what it promised.
  • Hypnotists – Many merchants will charge back these transactions if results they hoped for were not met.
  • Import/Export Business – Another example of taking goods over country borders which automatically brings in additional risk to any processing account.
  • Indirect Financial Consulting – When using a third party to consult, the high risk status gives the processor fraud protection.
  • International Cargo – Any time you introduce a multi-country element to credit card processing, the ability for fraud to be introduced skyrockets.
  • International Merchants operating in the US – Since the merchant isn’t operating from the United States, there are many unknowns about what is happening on the other side of their business, thus increasing the risk.
  • International Shipping – Transporting goods between countries is risky and introduces all sorts of elements to the financial stability of any transaction.
  • Investment Books – consumers get upset if the investor isn’t right which can lead to chargebacks.
  • Investment Firms – As investments are never a “sure thing” this is considered a risky industry for having a merchant account.
  • Investment Strategy – Anything with future promises can lead to chargeback.
  • Knife Sales – weapons of any kind are automatically given high risk status.
  • Kratom E Commerce – Accepting payments online is high risk, and Kratom is a substance in the health and wellness industry, which is also considered high risk.
  • Life Coaching – With no tangible goods involved in the transaction, life coaching is considered high risk.
  • Lingerie Businesses – Associated with the adult entertainment industry, chargebacks abound.
  • Lotteries – In most states you can buy lottery tickets with a credit card but if you’re allowed to and the ticket is not a winner, consumers try to chargeback the transactions.
  • Magazine Sales – Many magazine sales are recurring subscriptions, which can have issues with chargebacks.
  • Magazine Subscriptions – Same as magazine sales chargebacks can be huge when a recurring subscription happens. (often referred to as recurring billing.)
  • Mail Order Companies – When something is ordered through the mail chargeback risk can go up.
  • Marijuana Dispensaries – As marijuana isn’t a legal substance in every state, this is considered high risk due to the legality of the product. Cannabis credit card processing is available through Shift Processing.
  • Matchmaking Services – Another branch of the dating tree, and often associated with the adult entertainment industry.
  • Medical Devices – If a medical device doesn’t do what’s promised the purchaser may chargeback the transaction.
  • Membership Organizations – This is another instance of where the transactions don’t have any tangible product and are easily charged back to the merchant account.
  • Merchants on the MATCH list – If you are a merchant who has been reported to the MATCH list (Member Alert to Control High Risk Merchants) or the TMF (Terminated Merchant File) you are given high risk status.
  • Merchants with Poor Credit – Merchant accounts are given based on the credit score of the business owner. It’s assumed that the business owner is going to be making the financial decisions for the business, and a poor credit score reflects on the viability of any business transactions.
  • Modeling Agencies – At many agencies models are promised the world and it doesn’t happen. The consumer then wants their money back.
  • Movie Downloads – Transference of a digital product is considered of higher risk. Also, rarely is a physical card present at time of purchase.
  • Multilevel Marketing Sales – Often associated with pyramid schemes, MLM sales are considered a risky business.
  • Music Downloads – Purchasing any digital product is considered to be of higher risk than a physical transaction. Most of the time the card is not present in a digital transaction using a shopping cart.
  • Not A US Citizen Doing Business In The US – It’s possible to get a merchant account without a US social security number, but not having a SSN will increase the risk the processor will have in issuing a merchant account for your business.
  • Online Adult Membership Sites – If you’re running a website that is adult themed and requires payment for access, this is a highly volatile account and definitely high risk.
  • Offshore Corporations (Offshore Merchants) – The international element is what gives the high risk tag when looking for domestic merchant accounts.
  • Online Gambling (Online Gaming) – Without a card being present and gambling as the activity, there are two reasons why this would be on this list. Online payment alone is risky even without the gambling element.
  • Overseas Exporting Services – The introduction of the international element is what gains access to this list.
  • Pawn Shops – There’s a general stigma that goes along with pawn shops, and it’s reflected in their assignment to the high risk processors list.
  • Penny Auction Sites – Even though the customers are usually bidding at only a penny more per bid, users will commonly charge back the transaction when they don’t win.
  • Pepper Spray – Considered a type of weapon, pepper spray vendors are considered risky.
  • Points Programs – Points programs that cost money can cause chargeback issues if points are not used.
  • Pornographic Merchants – If you’re a part of the adult entertainment industry in any way, you’re considered high risk.
  • Precious Metals – Counterfeit metals can be a problem in this industry, making it more risky to accept payments for.
  • Prepaid Calling Cards – Anything prepaid that a consumer may not use increases chargeback issues.
  • Prepaid Debit Cards – When they expire or are lost consumers want their money back.
  • Psychic Services – “Honey, did you visit a psychic? No babe, I don’t remember visiting a psychic.” I’ll just reverse that charge then.
  • Real Estate – A common target for scams and identity theft is how real estate makes this list.
  • Replica Products (Watches, Handbags, Wallets, Sunglasses, Etc…) – As the product being sold isn’t authentic to the original manufacturer, the percentage of requests for refund is much higher than a traditional merchant.
  • Rewards Programs – If rewards are not spent, the consumer wants the money back.
  • Self-Defense – Since the payment provided is for instruction and not a physical product, the self-defense industry makes this list.
  • Self-Hypnosis Services – Yet another instance where the goods being transferred are of a service and not a physical product.
  • SEO Services – With a high rate of request for refund, SEO agencies make this list.
  • Social Networking Sites – Just like a dating site, if a consumer does not get what they want from it, they always like to chargeback.
  • Software Downloads – The software industry makes their way on to this list because of the digital nature of the goods being sold.
  • Sports Forecasting – An example of paying for information and not for a product, and usually not in person where the card would be present for the transaction.
  • Startups – Every startup is considered risky, and the percentage of startups that make it is quite small compared to the number that fail.
  • Student Loans – With the cost of a college education continually on the rise, so is the percentage of loans that default and never receive payment.
  • Strip Clubs – Associated with the adult entertainment industry gains the strip club access to this list.
  • Stun Gun Sales – considered a type of weapon, which makes it a high risk merchant.
  • Supplement Sales – The request for refund in this industry is quite high due to the nature of the product.
  • Sweepstakes – “Hey, I entered a sweepstake and I didn’t win. I’d like my money back please.”
  • Talent Agencies – “I paid thousands of dollars for headshots and glamorous outfits and I haven’t gotten any paid gigs. Pay me back my money please.”
  • Telemarketing Services – Telemarketing services many times do not have the results the purchaser would like to see, so the services are charged back.
  • Telephone Order Sales – Anything ordered over the phone has a increased risk of chargeback.
  • Timeshare Companies – When timeshares aren’t used, people want their money back.
  • Travel Agencies – If trips are not taken, consumers would like their funds returned.
  • Travel Clubs – Many travel club discounts aren’t what they were promised, increasing risk for chargebacks.
  • Vacation Rental Brokers – Third party brokers on prepaid vacation can have issues when customers cancel their trips.
  • Vape Shops – The level of criminal activity and theft is higher with vape shop merchants and therefore carries a high risk label.
  • Vitamin Sales – If the vitamins don’t provide the results the merchant would like to see they chargeback the transactions.
  • Web Designer – Because this service is prone to chargebacks, it has been classified as high risk.
  • Weight Loss – Considered risky because the results aren’t really up to the company, but rather the individual has to stick to the plan to get results, often resulting in chargebacks.
  • Yahoo Stores – Since the goods sold through Yahoo can easily be returned, they are considered a risky merchant.

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