What is acquisition pricing?

It means taking a loss in the short term, using below-market pricing to acquire new merchant accounts; locking you into a contract today, and later raising rates or fees to make the account profitable using language hidden in the fine print of the contract.

Acquisition pricing is similar to the introductory offers and solicitations that arrive in your mail box by credit card issuing companies that promote a low annual percentage rate while the fine print explains that it will expire in a few months and that there will be a balance transfer fee. Introductory pricing schemes are only good if you are constantly playing the game of jumping from one company to the next. However, changing your credit card processing vendor regularly for your business is different because these acquisition offers are contractually loaded with three-year contract terms and expensive early termination fees.

If it is too good to be true, then it probably is

In today's economy, merchants are looking to cut costs and one area that looks promising on the surface are merchant fees. The sin of acquisition pricing models is not disclosing all of the details and quoting a single element of a complex rate that is purposely designed to look lower and grab your attention. This below market price is over simplified to aid untrained and inexperienced reps in selling.

Focus on your bottom line cost of service, not just your rate. Rates can be deceiving because there are many different billing formats and fees charged that buy down your rate. Remember, all credit card processing companies operate from the exact same Interchange cost. Interchange is set by the card associations according to industry, card product acceptance, and method of acceptance.

If you get bids from several reputable companies and you take out all the companies selling equipment leases and all the companies with cancellation fees, and only accept direct Interchange pass through pricing then you will be well on your way to a good decision.