1) Negotiate your rate.
I have several friends in the merchant services business. And I can tell you personally and from a business owner’s perspective, always negotiate the best rate you can get. Merchant providers will always start high because there is a lot of profit margin in credit card processing. They ALL want your business and will do whatever it takes to get it. And obviously, the sales person wants to make a profit. However, having an idea of rates for your industry going into your meeting will make a big difference. Expect to pay an interchange fee (set by the card processor) and a merchant service provider fee. The merchant provider fee or markup fee is what you will want to negotiate. Keep in mind anything over the interchange fee is money in the provider’s pocket, so you want to get that as low as possible. Also be on the lookout for ancillary fees like batch fees, statement fees, PCI fees, etc. and negotiate these down as low as you can.
2) Talk to multiple providers.
Another good strategy when shopping for merchant service provider is to talk to multiple merchant providers and compare quotes. If you’re buying a POS system for your business, a lot of times the POS system company will dictate the processor you go with. The POS system might be tied to a specific processor only, so keep that in mind if you’re buying a POS as well. For that reason, you might want to look for a POS system that has the flexibility to use whatever processor you want. If you get locked into a contract, it can be hard and expensive to get out. So I would look for companies that don’t make you sign a contract. Once you have an idea of what you want to use for hardware and pay for merchant services, call 3-5 companies and shop for the best rate. I don’t recommend wasting someone’s time and trying to pit one company against another, but I see no harm in letting them know you’re shopping around and you want them to give you best rate they have to offer.
3) Don’t sign a contract.
Seriously, they will want you to sign one, but don’t. If the provider doesn’t offer
month-to-month services, I would bail. What if there support sucks, but you only find out after signing a 3 year contract? The provider might offer some free equipment or rebates to get you into a contract, but I would avoid it if at all possible. Getting out of a multi-year contract can be expensive with the cancellation fees.
4) Don’t lease equipment.
This is a no brainer, but people still do it all the time. It’s like a rent-to-own TV, it ends up costing you 5 times or more the actual cost of the TV. Some companies will give you free equipment, but they will also price the merchant provider markup fee higher to make up for the loss of hardware. My recommendation is to purchase the hardware you need upfront (at cost) and make sure you get the latest technology, whether that be wireless or EMV (chip and pin). If you’re taking payments mobile or with a virtual terminal, I really like Virtual Merchant services.
5) Find out if you can save on your existing rates.
If you already have a merchant account, you might be able to save some money by switching providers. Just because you had a slick sales person or your brother in-law sold you a “great deal,” that wasn’t so great after all; it doesn’t mean you can’t get out of it. Obviously you don’t want to jump ship just because you got an offer that’s too good to be true. But it’s ok to shop around and see if there is a better deal out there. Most “good” and honest providers will take a look at your statement and tell you if they can save you money. If they promise the moon, most likely they’re taking you for a ride. Look for seasoned veterans in the business also when switching. If you are working with a young blood, they may be more interested in selling you over helping you. That’s it for now, I hope this information was useful and happy merchant provider hunting!