What is the length of your agreement and do you have an early termination fee?

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Many merchant services reps don’t want you to know the length of their agreement but more importantly, they don’t want you to know their early termination fee. One of the major banks that does credit card processing has it in their agreement that if you do more than $1,000,000 in yearly processing volume, they can charge you $500.00 per location PLUS six (6) times the highest amount of revenue in any single calendar month during the initial term or any renewal term if you cancel with them! Read your agreement carefully BEFORE signing it.

Who will service my account and how?

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While many processing companies have a service center, not all will operate 24 hours a day and 7 days a week. Many banks that offer and sell credit card processing have a sales rep that will sign you up, but the banker only works during banking hours. When you need something outside of 9 to 5, who will you call? And will they be an expert at what they do to help you?

How long have you been in the merchant services business?

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This industry is complicated and let’s face it, whomever you sign with will be handling your money, so it’s a fair question to ask. Many processors hire merchant services reps with no experience. Not only that, but their training programs are meager at best. There is just too much information that needs to be known in order to enroll, process and service merchant accounts with excellence.  

Who are you sending my processing to?

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There are Direct Processors, Retail ISO’s and Wholesale ISO’s that do credit card processing. ISO stands for “Independent Sales Organization”. Within those three types of processors, there are basically two different kinds of sales reps: You can be a 1099 agent, OR you can be a W2 employee. The bottom line is, you can figure out very quickly who the rep is sending your processing to by looking at your merchant services agreement. Just because someone private labels your merchant services statement, that doesn’t mean that they are the actual processor. Always look at the agreement you are asked to sign.

What kind of pricing structure will you be putting me on?

There are basically two major pricing structures in this industry. There is COST PLUS pricing (a.k.a. Interchange Plus Pricing) but there is also Tiered Pricing. Tiered Pricing is very difficult to understand, and it makes it easier for the processor to hide extra profit margin on your business. Companies like Home Depot and Wal-Mart would never dream of being put on Tiered Pricing where profit margin is hidden. The good news is that every processor can give you COST PLUS pricing if you ask and if you know what you are looking at.