The merchant services industry has a bad rap. For years, banks and processors have been taking advantage of small business owners withpricing models that most business owners have a very hard time understanding.
At Capital Bankcard South, we take an education first stance for our customers and prospects. We want you to understand your rates and fees, and be able to decipher your merchant statement. We keep accounts in house much longer when our customers actually understand what they are paying. Crazy right? We don't think so.
We have a free E-Book for download that goes into greater detail on this subject and many others, and can be found HERE.
Getting the best rates for your business is simple. Just like any other product or service you need for your business, the number one thing to remember is to do your homework and research before you sign anything. After you've signed, it can be too late, and sometimes you can get stuck in a bad relationship. Follow these four steps, and I guarantee you will get the best rates for your business.
1. Don't go through your bank
The sneaky little secret that the banks don't tell you is that they don't actually handle their own processing. Sure, they will sign you up, and even fill out the application with you, but when it comes to actually handling customer service and answering questions related to your account they will direct you to a call center in a far away land.
Many business owners do not mind this practice, but it directly affects the rates that you pay. We routinely beat the banks by 15-30%. The reason is that the banks are still getting paid for outsourcing your business. The processor also gets paid for your account, and you are essentially double billed.
Cut out the middleman and go direct.
2. Make sure you have the right pricing model
There are several ways to price merchant accounts. We take into account average ticket size, industry, frequency of transactions, and many other factors. What is good for you may not always be the best for another business and vice versa. Most of the time you are safe on an interchange plus model, but your sales rep should be able to show you the different options, and how they affect your overall fees. If your rep cannot or will not do this, find another company to work with.
The most common pricing models are Interchange Plus, Tiered, and Flat Rate.
A final model known as ERR should be avoided at all costs.
3. Research your processor
The internet makes the merchant services world a much smaller sandbox. Before you sign anything, Google the company's reviews. If they are mostly bad, you will usually end up ina bad situation. If they do it so others, they will most likely do it to you.
There are many third party review sites on the web, and can be found very easily. Just search "Potential Company" reviews and you should find what you are looking for.
4. Stay Local
This is a commonly overlooked method of keeping rates down, but if you think about it, should be at the top of your list. It is the practice of virtually all processors to hire independent agents. The processor is usually headquartered somewhere else, and usually the rep works out of his/her home. What they do not tell you is that in some cases that rep is brand new, having less than 1 year of experience. The industry has a very high turnover rate. If/When that sales rep moves on to another company, your account will be transferred back to corporate, and you are now just another number serviced from another location. If there is not a brick and mortar office locally, you have much less control over your rates, and quality of service.
Stay local, and avoid a potentially bad situation.
There are many other ways to keep costs down and ensure your business has the best rates. We are always available for a quick call, or you can download our E-Book for the most up to date information on the merchant services industry.
