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Top 8 misconceptions about merchant services

September 27, 2017

By Kerry Wezner, courtesy of SBAM Approved Partner International Bancard
If you already accept credit cards, are looking to switch merchant services providers, or want to begin the process of accepting credit cards, it’s important to know exactly what you are getting out of a merchant services provider. There are a number of providers who want to help their clients and help them accept credit cards the best way possible. 

Here are the top 8 misconceptions about merchant services and how those misconceptions are not always true – depending on who you work with. 

1. “What’s your rate?” 
“What’s your rate?” is often the first question that a business owner asks to a merchant services provider. While rates are important, it’s also important to understand the fees and the breakdown of those fees. Most businesses are not fully educated on how they are priced, therefore may not know what they are being charged. 

Also, you often get what you pay for. You can receive the lowest possible rate, but will you receive good equipment? Or great technical and customer support? What about educational tools, PCI compliance assistance, or fraud protection? Don’t be fooled by low rates. Make sure you completely understand what you are getting out of your merchant services provider. You may think you are getting a great low rate, but really, other additional costs are hidden in another line item. 

If something is too good to be true, it probably is. 

2. “You guys are scammers”
Business owners often have the misconception that the merchant services company takes their money and gets a majority of their collected fees. However, that is far from the truth. Most of the funds go to the issuing banks, some go to the card brands (like Visa or MasterCard), some go to the gateway or other third parties (like gift card providers) when applicable, then a tiny portion goes to the merchant services provider. 

Business owners tend to think that just because they have been treated poorly in the past by a merchant services company, that all merchant services companies are going to treat them the same. 

3. “I’m stuck in my contract”
There is always a way out of your contract if you are not happy with your current service. Don’t let yourself stay stuck in a bad deal. Often, merchant services providers have the ability to buy out your contract and offer better pricing, better equipment, and better service.

4. “My statements are hard to understand” 
Statements from merchant services providers can be really difficult to read and make you feel like you’re trying to interpret a different language. It can be especially difficult if you are not familiar with key phrases like interchange, batch, basis points, or processing fees. 

Partner with a merchant services provider that will walk you through the statements and help you understand line by line. Once you educate yourself on your statements, they will be a breeze to understand! 

5. “You guys are all the same”
Are all doctors the same? Are all restaurants the same? No! Every merchant services provider has its own specialty, core values, products, and services. Some merchant services providers outsource pieces of their business like their customer care. Others only offer POS solutions. 

You should take the time to fully comprehend what is being offered to you, how it will help your business, and whether or not the merchant services provider is a good business fit. 

6. “Accepting credit cards is too expensive”
In most cases, accepting credit cards does come at a cost, but there are ways to make sure your business is accepting credit cards without breaking the bank:

  • Surcharging and cash discount programs allow businesses the opportunity to offset credit card processing fees, virtually eliminating the cost of accepting credit cards
  • Equipment leasing is also a great way to free up your funds. It’s easy and affordable to get the credit card processing equipment you want for your business. 

A good merchant services provider will do everything they can to make sure you can accept credit cards affordably without sacrificing quality. 

7. “All card transactions cost the same”
The average business owner does not know that some transactions are more expensive than others or why there is a cost difference between transactions. 

Depending on the transaction type, your costs will vary: 

  • Was the transaction swiped? EMV? Keyed? eCommerce?
  • Was the transaction batched on time? 
  • Is the payment card a credit or debit card? 
  • Is the card a rewards-based card? 

Working with a merchant services provider who will help you understand the difference between the costs and what you are being charged. They will also ensure that no surprises come up on your statements. 

8. “Accepting credit cards isn’t safe” 

With recent large scale data breaches and reports of fraud, it is understandable why a business owner would be cautious about accepting credit cards. 

However, if you take the right precautions, you can protect yourself and your customers from data breaches, fraud, and the headache that goes along with it. 

Your merchant services provider will be able to set you up with equipment and programs to securely accept credit cards: 

Making sure your business accepts payments safely should be your merchant services provider’s number one goal.

Merchant services can be quite easy to understand – if you are working with the right provider. A provider who will take the time to educate you and ultimately help you achieve your business goals. 

SBAM members can work directly with Michigan-based International Bancard. Learn more here.

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