You embark on a new business. You plan to sell products and services through your website. You shop around and find a merchant provider that appears to give you the best deal. The rates are low so you sign a long-term contract.
When you get your first statement, however, you notice several fees you weren’t aware of. Setup fees, annual fees, software fees, batch fees, and so on. You realize that maybe your deal wasn’t so great after all, but you can’t leave. You’re in a contract.
Here’s the ugly truth: Because there are so many different rates and fees involved in having a merchant account, some businesses end up paying more than they expected.
Here’s five easy steps you can take to safeguard yourself when shopping around for a merchant account:
1. Have a basic understanding of how merchant processing fees and rates work.
For many of us, when we think of rates and fees for a merchant account, we only think of the ones directly associated with the credit card swipe. As such, merchant providers will only advertise those particular fees prominently on their websites and/or brochures. This includes the qualified discount rate and sometimes the per item fee.
These, of course, are not the only fees associated with having a merchant account. Other common fees include the gateway fee, monthly minimum fees, annual fees, cancellation fees, batch fees, set up fees, pass through fees, over limit fees, voice authorization fees, software fees, statement fees, customer or technical support fees, and more.
2. Ask for details and an explanation on all fees.
When you receive your merchant application, ask for an explanation for all of the fees listed, including if they are recurring, one-time, or penalties.
Hidden fees are almost always hidden in plain sight. So if you see a fee you don’t understand or a fee that you haven’t received an adequate explanation for, demand more information. And don’t be afraid to explicitly ask whether there are any fees involved that are not listed on your application.
3. If a merchant provider offers to waive any of your fees, ask for it in writing.
Don’t take their word for it. If a special arrangement is made over the phone, especially if they offer to waive any fees, be sure to get it in writing.
4. Understand the terms of your contract.
How long are you locked into your contract? What’s the cancellation fee? These are essential items you’ll need to consider before signing anything.
5. Compare with Newtek.
If your looking for a merchant account, don’t forget that Newtek has been helping businesses with their ecommerce and merchant needs for over a decade. NewtPay, which is our special merchant product designed for online merchants, features no start up costs, no monthly fees, competitive rates, and no contract.
If you’d like to speak with one of our specialists about NewtPay, and your business is based in the US, call us at 1-877-232-4678, option 2, or email us your contact information at email@example.com.