Merchant Services Reviews

Point of sale systems

If you are looking into merchant accounting services, you have probably also looked into point of sale options. You may be preparing to choose a point of sale (POS) system or you may already have one. Regardless, you need to understand which POS systems work with which merchant accounts. In choosing which merchant services company you work with, keep this in mind. Whenever buying this technology, make sure you buy it upfront rather than lease it from a merchant account company or a POS company. Leasing can lead you to paying far more than the hardware is worth.

Remember, too, that you have a variety of software and hardware options. Some recent systems offer touchscreens, which provides a more streamlined experience. Some systems use a cloud-based system. Additionally, consider mobile and wireless technology; even though it is also fairly new, it has its own benefits since it is cost-effective for small to mid-sized businesses with limited needs. No matter what you choose, it is important to have up-to-date hardware when opening your account. Hardware today needs to support EMV (chip technology, e.g. EuroPay MasterCard, Visa). 

Once you narrow your options according to what is compatible and reasonable for your company, consider your business goals: How much inventory information do you need from your POS? How much are you willing to pay?  How much should you pay according to your business’s revenue? How easy is the software and hardware to use? 

Pricing models

There are three different types of pricing models for credit card processing: flat rate, tiered pricing, and interchange plus. Know which model works best for your company so you can find the merchant account service best equipped to service your customers. And make sure you know your company’s pricing model before you choose a merchant account company. Also, be aware of your business type and if it is considered to be high risk or not because this will affect the pricing of your merchant account. High risk factors will often depend on if you have a small or large business, and if you have a lot of possible chargebacks and returns. So, make sure to have your merchant account provider break down the details for you and where you fall in the pricing model options. And here is a breakdown of the three types of pricing models. 

Processors like PayPal have a flat rate model, which is the sometimes considered best for smaller companies that generate relatively low revenue totals each month. However, If you choose to use a flat rate model, make sure you do your research. Because flat rate is such an appealing option for many small businesses, some merchant accounting companies disguise their rates as flat rate models, causing you to pay more money that you anticipated. 

Tiered pricing is based on a qualification system that determines which rate tier a merchant's transaction qualifies for. Tier pricing appeals to some merchants because it requires minimal time. However, it generally results in much higher processing costs overall, and you receive few to no details on what exactly the merchant is paying for.

Finally, an interchange plus pricing model allows merchants to pay only two fees: a flat fee, regardless of the wholesale processing rate, and a small transaction fee. This tends to be geared toward larger companies bringing in a fair amount of revenue, but recently, the market for merchant accounts is more competitive, so smaller businesses can get accounts on this pricing structure. 

Fees

When budgeting for a merchant account service, make sure you understand all of the fees involved. While some merchant account providers do not charge added feeds, many companies do charge fees outside of the typical monthly charge. Carefully researching and asking questions is the key in this industry. Some companies may have their fees openly stated on their websites, others may not. Some companies may have aspects of price listed, but not all of the information you need to accurately anticipate the costs you should expect. This is not to say that all companies intentionally withhold pricing information, but you should be aware that some companies — as with all industries — are less transparent than others. Because of this, don’t be afraid to ask a lot of questions and research each company before committing to a merchant account company. It is better to over prepare than to risk choosing a sub-par company or one that is ill-equipped to service your customers. Some of the different types of fees you may encounter include the following:

• Discount rate—the percentage charged on each transaction, which depends on the type of credit card and the type of transaction.
• Transaction fee—a charge for processing each individual transaction, which depends on the type of transaction.
• PIN debit transaction fee—a fee when someone using a debit card must enter their personal identification number (PIN).
• Monthly minimum fee—when creating an account, you usually agree with the merchant on the number of transactions you will generate each month, and if your monthly fees do not meet that minimum, you must pay the monthly minimum fee.
• Application/setup fee—a one-time, upfront charge for setting up your merchant account.
• Annual fee—the amount charged by a processor for your merchant account on an annual basis.
• Cancellation or termination fee—if you cancel or terminate your merchant account before the date agreed upon with your provider, he or she will most likely charge this fee. Some companies allow room for negotiation, especially if the cancellation deals with unresolved problems or issues that the provider cannot resolve.