The Green Sheet Online Edition

August 12, 2024 • Issue 24:08:01

Work with honest merchant service providers

By Elie Y. Katz
National Retail Solutions (NRS)

If you're just getting started as a merchant level salesperson, switching to a new ISO or processor, or assuming a new role in the multifaceted payments business, it's essential that you choose your partners wisely. That's because it's an unfortunate reality that not all providers play fair.

Some providers use sneaky tricks to overcharge businesses and lock them into bad deals. If you sign on with this type of company, you may profit in the short term but risk irreparable reputational damage.

Common red flags

Understanding the bad business practices you may encounter is vital. Following are common ways self-serving providers mislead businesses.

• Hidden fees and misleading pricing: Some providers lure merchants in with low rates, then surprise them with extra fees for security or monthly minimums. They might use tricky pricing that makes it hard to know the actual cost, such as burying fees in complex statements. They could also charge different rates for different types of transactions, without any prior notice or clear explanation of how their pricing works. These hidden costs can quickly add up and significantly impact a retailer's line.
• Early termination fees and long-term contracts: Watch out for contracts that lock businesses in for a long time. Should businesses want to switch providers before the contract ends, they could face hefty fees, making it expensive to leave even if they're unhappy with the service. These fees can sometimes negate savings they gained from the provider's initial rates, and can even reach hundreds or thousands of dollars.
• Equipment leasing scams: Some providers push merchants to rent expensive equipment they don't need, promising it's essential for their businesses. They might hide extra costs like maintenance fees or insurance, or lock retailers into long leases with complicated cancellation terms. This can trap businesses into paying for equipment they don't use or can't afford, creating a financial burden.
• Misrepresentation of services: Be careful of providers who promise things that seem too good to be true. They might say a merchant is guaranteed to get approved or that they have the lowest rates, but it might not be true. They may also overstate the capabilities of their products or services, leading to unmet expectations and potential financial loss for merchants.
• Inadequate customer support: Some providers don't offer good customer service. When a business needs help, it's hard to reach these providers, or they don't solve the problem. This can be incredibly frustrating, especially when dealing with payment processing errors or chargeback disputes, potentially costing retailers time and money. Unresponsive customer support can even leave a business vulnerable to fraud or security breaches—with no assistance whatsoever.
• Bait-and-switch tactics: Watch out for providers that offer great deals first, then change them later. After a business is onboarded, the low prices or good terms might disappear, replaced with higher fees, stricter terms or less desirable services. This can leave a merchant feeling trapped and frustrated because they're stuck with a provider that doesn't deliver on their initial promises.
• High-pressure sales tactics: Be wary of providers who pressure you to sign merchants up for accounts quickly, using tactics like limited-time offers or scare tactics about missing out on a deal. They might discourage you from giving businesses time to fully consider their terms, compare other options or consult with advisers. This pressure can lead to hasty decisions merchants will later regret, and you'll be the one they blame.

Protect yourself

Don't rush. Take the time to read all the fine print in merchant contracts and agreements. Look out for hidden fees, confusing terms or anything else that raises red flags. Don't be afraid to ask for clarification if something doesn't make sense. Remember, your career is on the line.

Do your homework and research potential ISOs, gateways, processors and other potential partners. Talk with colleagues. Check online reviews. Compare different providers to see who offers the best combination of features, prices and customer service. Don't hesitate to ask questions.

Following the tips in this article will help protect you from becoming associated with dishonest providers and enable you to establish mutually beneficial business relationships that last.

Elie Y. Katz is founder, president and CEO at National Retail Solutions (NRS), https://nrsplus.com. Contact him by phone at 201-715-5179 or by email at .

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