In today’s small business environment, using the best resources may make the difference between succeeding or failing.
One important benefit a good number of businesses offer their patrons is the acceptance of credit cards as payment. This is useful for customers as it allows them to buy what they want, and finance it the way they want. It is favorable to you because it should usually boost your sales.
The fact is that most small businesses that offer or want to offer credit card sales unfortunately know almost nothing about the industry. Obviously, they are prone to being ripped off by the countless wolves in sheep’s clothing who make use of switch and bait tactics.
The method used most frequently to swindle small businesses is the “loss-leaader” scam. A processor offers a merchant a really low rate, say 1.2%. Ignorant merchants will usually only review the lowest rate versus the “effective rate,” or overall cost (much as unsophisticated homeowners look only at the lowest interest rate they can get, not paying thought to the conditions of the mortgage).
But the fact of the matter is that that 1.2% rate so heavily promoted is available only for a very specific instance, say for a particular kind of credit card used in a particular way, purchasing only a certain kind of product or service.
The rest of the time?
Appreciably higher rates that suck the most out of small businesses and more than compensate for the low rate offered.
Another method of doing this is to setup the account so that the majority of the merchant’s transactions fall into a category that is notably higher than this low loss-leader rate.
This is not an improbable development, statistics prove that over 98% of small businesses pay too much for credit card processing. The merchant account industry is fraught with confusing pricing, hard-to-understand statements, and sales people pushing bait-and-switch programs as fast as they can.
And, today, most entrepreneurs do not even know there are new federal security and compliance issues that even the smallest merchant taking credit cards must stick to or face staggering penalties that could wipe them out financially. (Can anybody say,’TJ Max’ and their ,000,000 penalty?)
There are a number of issues one should be conscious of when evaluating a new merchant account.
- Better Business Bureau Good Standing
- No Unnecessary Fees Or Penalities
- High Customer Retention (I know of one resource with a 98% retention rate, which is incredibly high in this industry, plus zero BBB complaints)
- 24 Hour, 365 Days Per Year Customer Service
- Lowest OVERALL Cost (check your ‘effective rate,’ not the loss-leader you’re being scammed with)
- Ethical Business Practices
- Easy Switch To New Service}
One of the things a merchant should use is the Merchant Account Statement Analysis. A merchant can get this kind of an analysis from upright merchant account processors (nevertheless you need to make sure the report you get is unbiased).
A Credit Card Analysis offers the following:
Checks Your Statement For Accuracy …
It is estimated that in over fifty percent of credit card processing statements there are errors. Occasionally these are just mistakes. Sometimes they are on purpose.
Reviews Your Statement For Better Pricing & Exclusive Programs …
One company has a 98% success rate in discovering a better pricing structure for those firms they execute a Statement Analysis for. Why? Because they use all 300 or so pricing categories the credit card companies accept and create a custom-designed program.
Offers You An “Apple-To-Apples” Assessment …
Your Statement Analysis should show you a comparison of what you are at present paying versus a tailored program intended specially for your company. You ought to be able to realistically save 10-40% from what you’re currently paying.