Before Merchant Rates, Negotiate Definitions First

Time and again we see a complex payments industry being made more confusing for merchants accepting credit and debit cards.  Examine the following examples.

As a consumer it is better not to get trapped in a long-term contracts and cancellation penalties.  A sales rep may tell you they don't have an "early termination fee" and may be technically right because the company they work for has changed the definition and called it a "de-conversion fee".   The contract states that price changes can be made with 30 days prior written notice, yet if you terminate the agreement within the first 3 years following the date of your execution of the agreement, "you agree to pay de-conversion fees of an amount equal to" the transaction fees incurred by you during the calendar month immediately preceding termination multiplied by the number of months remaining plus two hundred and fifty dollars.  Most will agree this is a very expensive termination fee regardless of term used to define it. 

Or a sales rep tells you they will give you a "Free Terminal"!  Sure to catch your attention and put this offer at the top of your list, but wait, “Nothing is Free” right?  The free credit card machine marketing ploy seen throughout the credit card processing industry is something that merchants need to carefully examine.  Just because none of their fees are listed as equipment related doesn't mean you are getting to use the terminal for free.  Consider instead they simple charge a maintenance fee, a compliance fee, an annual fee, a batch fee, a service fee, a supply fee, or a combination of all these.    What companies tend to do is provide a merchant with a terminal to use for card processing but then in the fine print you will usually find the a statement that says something along the lines of “the merchant must return the terminal in the same condition as it was received” if they cancel their merchant account.  If the machine is not in the same condition as when originally provided, the merchant is then automatically charged from their checking account an amount usually in the range of $595.00 to $795.00.  If you don't get to keep the free equipment once you stop processing and since you are just getting to use the terminal and are being charged a bunch of fees to do so, is it really "free"? 

Other examples include defining when a non-qualified surcharge is billed since definitions of the term "non-qualified" will vary by provider.  Are you billed a fee per authorization attempt or per settled transaction?  How is billing on cardholder returns defined?  As you can see, unfortunately it is not as simple as calling around asking "what's your rate?"  Before you choose your processing partner, broaden your search criteria to include the specific terms of the offer, read the fine print for yourself and make sure you understand the "definitions" of the terms used. 

For a professional consultation or with any questions, please contact us at 800-397-2380 and review the resources available on our corporate site and our merchant rates calculator quote tool at


by Ty Hardison

Share this Post

Share to Facebook Share to Twitter Share to Google+ Share to LinkedIn More...

See Your Merchant
Interchange Rates