Let the Merchant Beware

Let the Merchant Beware


In today’s cutthroat market for sell credit card processing, free credit card terminals and smartphone swipes appear to be all the rage. Numerous sizable providers have thrown free, free, free adverts everywhere they could. Before hopping on the free equipment bandwagon, however, merchants should carefully weigh all the available information.

Free will never truly be free. Yes, it is true that saving money on a terminal or a credit card swipe for a smartphone is wonderful, but businesses need to understand the tradeoffs. The majority of retailers are unaware of all the hidden costs and fees connected with free equipment. Until they appear on a statement, these are frequently never mentioned.

Free swipes or terminals will have an annual cost. I was recently asked to start marketing a program by an undisclosed source. The chat continued as usual, with the young woman praising


They offered a program for both agents and merchantssell credit card processing. I listened to her spiel for a while before she asked if I had any questions. Yes, I inquired as to your yearly charges. I questioned, “What about equipment?” She said, “$129.00 per year billed annually but you may waive that if you need to seal the deal.” Her response amply illustrates my thesis. The annual cost of $129 cannot be waived if you supply a free terminal, however we can reprogrammed their current equipment, sell them a terminal, or provide them with a terminal for free. One may readily calculate that you will spend $390.00 for that $250.00 terminal or $49.99 swipe if they have a three-year contract, which is the standard.

Higher prices could also result from free equipment. Many companies are now providing free phone swipes as smart phone processing starts to take off in the market. Price ranges for typical swipes range from $49.99 for a basic model to $249.99 for a Bluetooth model that prints a receipt. Two significant market participants were found to be offering a two tier plan with a free swipe when rates for their products were compared. Company A offered.19 cents per transaction, 2.69% qualified, and 3.49% non-qualified. Company B offered 1.15 cents per transaction, 2.7% qualifying, and 3.7% non-qualified. Remember that a two-tiered scheme with those two rates would make you laughable in any American firm. Additionally, until they receive the statement, the majority of retailers won’t be aware that almost everything except debit cards will fall under the non-qualified category. This looks to have a convenience aspect for businesses who just conduct a few transactions each month. If you start to process more than that, it could cost you a significant amount of money.

Accepting free equipment commits you to a minimum three-year agreement. The majority of business owners who have been persuaded by the “concept” of a better bargain will soon assume the worst and sign on the dotted line. What happens if something goes wrong? Your business may effectively be forced to close down due to subpar service or equipment issues. It will take a few days and cost between $250 and $500 to get a new terminal. You can pay more than you anticipated as a result of statement errors and discrepancies. If you try to back out of that fantastic deal, you will soon learn that there is a $250 (or higher) cancellation penalty. You can count on it being in the paperwork, even if the agent didn’t mention it.

Make sure you do your research as a trader. When taking free equipment, be aware of what you are obtaining. Knowing the restrictions and implications is crucial. Make sure you look into the possibilities of having your own terminal. They can provide business owners more control over their processing future and are reasonably priced.

You understand as a small business owner that nothing is ever truly free. It just depends on when and how you make the payment. Get a Cost/Benefit Analysis by asking a merchant service specialist to explain in detail what is being charged in the merchant statement and to provide a comparative quote between what is being charged at the moment and the rates and fees that they would impose at all tiers. He or she should be able to explain the differences between each rate and how to avoid paying the higher discount rates.

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