$500 Rate Guarantee If We Can’t Beat Your Current Payment Processing Rate! Why Not?

Misleading Credit Card Junk MailJunk Mail OfferI’ve often referred to the marketing gimmick in payment processing that offers a $500 reward if they can’t match or lower a merchant’s credit card processing rate.  Imagine my surprise today when I was going through my business junk mail that I got one of these offers sent to me!  I couldn’t help but laugh that a large bank and their credit card processor sent their rate solicitation to me, but I think it’s obvious that they are doing an indiscriminate mass mailing to every business in Bloomington Normal and probably most of Illinois.

So today, I thought it would be a great opportunity to examine this ‘guarantee’ that is very common in the merchant payment processing arena.  I would like to begin by saying that the offer itself is not dishonest.  I think from a purely marketing standpoint it can be quite advantageous for a company to put together such an offering.  And apparently this gimmick must work, because I see it repeated so often.  What I haven’t actually seen is anyone collect on this type offer!  It reminds me of a carnival game where a huge prize is offered, but the game is rigged so that practically no one will win!

How is the game rigged, you ask?  In order to qualify for this offer, you must first provide a recent credit card processing statement.  With this statement in hand they can undercut your current rate as much or as little as they wish.  The only guidelines they will have is that the rate must be somewhere between interchange and your current rate.  EVERY merchant service provider (myself included) has the same cost with interchange.  Any rate provided under interchange cost would be costing the current provider every month, so it’s a 100% safe bet that the current rate will be above interchange.  Even if the margins are slim, this special offer needs only to match the current rate in order to avoid paying out the $500.  I have actually witnessed accounts that were priced at very, very close to being actually at interchange, but that was only when there were other special circumstances involved.  Even with an account at interchange, they can offer a match to avoid paying the $500 reward, knowing full well that no one would go to the hassles of switching a merchant services for no savings.  Especially to a company that is touting it’s rate as their primary selling feature.

Under these terms, I also can offer $500 if I can’t match or beat a merchant’s current rate!  Why stop there?  I’ll double it!  No better yet, I’m so confident that I can match or beat any rate out there, I’m willing to offer the merchant services industry’s first $2500 rate guarantee!

And I can do that, very easily and I know there is little risk that I’ll end up having to actually pay out the $2500.  But here’s what I don’t like about this offer and why I don’t advertise it like many competitors.  I believe it’s the lowest form of rate peddling because they aren’t even offering a rate.  They are only promising to slightly beat your current rate, after they see what it is!  In my experience, many times I’ve shopped for a vendor to work with, whether it’s for work around the house, a large product purchase, such as a car or any service.  I’ve found that the lowest priced option has certainly not been the best value.  In fact my personal worst horror stories, that ended up costing me the most, were from the lowest price quotes.  I want to provide a solid value to my customers that goes beyond a low price.  Although my pricing is as competitive as any in the market, it’s far more important to provide overall value and service for my customers.

So, some big organizations might advertise a low rate.  I won’t make that my only selling point.  There are many reasons why Cornerstone Business Solutions is the best choice for merchant services.  I will continue to offer service that has my customers raving about me.  I’ll be the professional that offers the solutions to increase business efficiency.  I’ll be THE point of contact a merchant can get ahold of when he needs me.  And the best part is, it won’t cost more, because there is much more to credit card processing than a rateBut I will not advertise my service as the cheapest!

Another issue that bothers me about these type of offers is that they are more concerned about beating the rate, however slightly, than looking out for if a change is actually good.  Is it worth the hassle?  Are they going to really recommend you leave for a few dollars a month?  Will they still have the best rate after they get you to change?  Will the service stack up?  Will they be charging for equipment and what will the warranty be?

I also want to offer some advice for those that actually do follow through with these types of offers.  As I’ve mentioned before, there is much variation in merchant services statements.  This can make them difficult to read.  When a merchant does get a quote, they will generally get an analysis showing the savings.  These analysis are designed to show maximum savings, so make sure that the person doing the analysis has the credentials (such as a Certified Payment Professional) to do an honest and accurate assessment.  The math needs to be checked line by line for accuracy.  Make sure accurate information is pulled from the old statement and make sure that the rates they offer are the same rates used on the Schedule A of the contract that they want you to sign.  It’s critical to check the entire contract to find the additional fees not mentioned in the rate comparison.  Then, when the first statement comes, check that you are actually receiving the rates promised.  I’d recommend these statements continue to be reviewed every six months at a minimum to see if they’ve changed.

I know that representative’s that are employees of such organizations have the interest of their employer first.  They are often under quotas and pressure to ‘close deals’.  This means that a merchant can expect pressure and sales tactics to switch even if it isn’t in the merchant’s best interest.  I am not an employee and it’s always been my philosophy to put the business owner first.  In my opinion, my employer and first loyalty is to the business owner.  I have no quotas or pressure and my moral compass guides me to build my reputation, first and foremost.  Many times when assessing a merchant situation I’ve walked away from business that I didn’t feel was a big enough win for the merchant.  It’s truly my goal to help people out first and foremost.  A lot of times it means I’m providing their payment services and other times it means I’ve helped out another way.  In my opinion it’s part of being a professional, not a rate peddling salesman.

As a side note, when I stopped to think how many of those mailers must be sent out just to end up in the trash, I just picture a forest being hacked down.  It reminded me of an old phrase that was once a popular email signature and I think it’s appropriate here.  “Although no trees were killed in the creation of this article, many electrons were horribly inconvenienced!”


Lowest Rate Merchant Account! Beware…

Navigating Through the Risks of Credit Card Processing by Bill Pirtle

Navigating Through the Risks of Credit Card Processing by Bill Pirtle

Business owners shopping for the lowest rate merchant account are often missing critical information that will cost them.  The most common first question I get from someone shopping for credit card processing is “What’s your rate?”  Unfortunately, it’s not as easy as just one industry wide benchmark rate that makes for easy comparison.

Now I understand that business owners are busy and they just want the bottom line number and that’s exactly why they’ll end up paying more for their merchant service program overall even if the quoted rate they go with is the lowest!

Here’s the reason why.  There are many, many factors and charges in this industry.  It isn’t regulated as far as charges go and it is non- standardized, allowing for various charges depending on situations.  This also opens the door to many discretionary charges beyond just a discount rate.  These charges may include large monthly minimums, equipment charges, annual fees, application fees, PCI compliance and non-compliance fees,  monthly membership fees, monthly membership club fees, mid qualified and non-qualified penalties, batch out fees, monthly equipment warranty charges, transaction fees as well as authorization charges, equipment repair charges and many, many more.  All these fees will be a cost beyond the rate!  As explained in this article, all credit card processors have the same cost with interchange and must make a modest profit beyond that.  How a provider achieves that mark-up can sometimes be misleading and confusing.

Most business people are busy and just want the bottom line, but credit card processing is an area where they should work with a professional that will take the time to learn about the customer’s business to find the best plan and explain all of the charges.  Too many times I’ve seen business owners too busy to take the time to learn and the consequences have proved to be costly.

Merchants often ask the rate and go with what they perceive as being the cheapest plan, which ends up being the most expensive.  The reason is that the true professionals in the merchant payment solutions industry are consultants.   They will not just peddle a cheap rate because they realize that the rate is just one part of the value of the best solution, selected specifically for a merchant’s needs.  If an honest bank card representative is pressed for a rate without sufficient information, he would list every possible fee because using guess work, he has to account for every possible scenario, making him sound ridiculously expensive.

Meanwhile, the uneducated/dishonest peddler of merchant services doesn’t have this problem.  When put on the spot with the question “What’s your rate?” he’ll have a quick answer.  And yes, it’s low and simple.  It probably even comes with some promise of ‘guaranteed lowest rate’.  (Does it strike anyone else as odd that thousands of companies advertise a ‘lowest rate merchant account guarantee’?  How do they all have the lowest rate?)  So of course, that company seems the obvious choice.  What he’s not telling is all the rest that a conned merchant finds out later when all the deductions start coming out of the checking account or they have problems with the terminal or customer service.  That’s when the true cost is realized, and then it’s too late because they also learn they’re stuck in a contract for years.  A simple google search of merchant services ripoff or similar phrases will verify multitudes of merchants that attest to such experiences.

Low rate specialists are like shell game shufflers.  They don’t have lower ‘wholesale’ costs, lower operating expenses or a lower markup.  What they do provide is a good illusion of being cheaper, unless you can see behind the smoke and mirrors.  Does the average merchant doing a price comparison really understand the merchant services contract or have time to study it?  He needs to if he wants to see if the price is overall competitive and not a hook rate!  (Hint:  ALL merchant services contracts have fine print that allow for rate increases.  A good company and agent won’t raise the rate unless the card brands do.)   I personally have over seventeen years of experience deciphering rates and contracts.  It literally took me three years to be able to understand all of the loop holes and contracts in this credit card processing industry. The merchant is responsible for what is actually written on that contract, not what the agent says or omits.

A business owner does have resources available to learn more about merchant accounts and rates.  I’d suggest other articles in this blog site for starters.  Other than that, I’d highly recommend a book called Navigating Through the Risks of Credit Card Processing , by Bill Pirtle.  I’m proud to call Bill a friend and he’s done a terrific job of educating on this complex topic.

Now, assuming a merchant doesn’t have the time to study this book or become a bank card processing expert,  what question should he being asking when shopping for the best value on a merchant account?

A professional bankcard agent with integrity can provide a more competitive rate overall than a rate peddler.  They can find the ideal solution to keep the overall processing costs low as well as increase efficiency.  A great merchant payment professional will have the experience necessary to provide the guidance in selecting the right long-term solution that will keep the overall processing solution costs low as well as increase efficiency.

Why is a business more likely to get a better rate with a veteran, independent representative than a new bank card rep, a telemarketer or a company in-house sales person?  Because the veteran representative has established relationships that allow him to choose the most advantageous processing program.  Also, it’s an industry secret that the representative can choose to sell the equipment at a profit and increase the overall rate in whatever manner he can slip it by to make a quick buck.   The long-term agent will already have a book of business that provides his income and is more concerned about building long-term relationships than big profits that don’t last.

So how does a merchant find a professional merchant payment provider?   One indication is if a merchant is a Certified Payment Professional (CPP).  This is a voluntary designation that only the most dedicated and experienced agents will have earned.  The minimum qualifying standards as well as the testing is a screening process that less than a tenth of a percent of all agents have achieved.  It is a strong indication of integrity and experience in the field.  This can be checked at the national CPP Registry to see if an agent has such designation.

Another way to find out if the company and an agent are a good choice is through a quick google search.  (Hint:  Avoid the paid advertisements from searches.  These companies are paying approximately $25 every click through and those huge advertising fees ultimately are paid for by their customers.)  It’s incredible what can be found out about a company and a person online.  Does the individual/company show up on scam sites or favorable customer reviews?  Does the agent have a strong presence online or is it just a static website or nothing at all?  Using common sense, one review good or bad may not mean much, but when the overwhelming evidence is positive or negative one can usually reach the correct conclusion about a processing company.

When selecting the best credit card processing rate, a merchant can choose which route to base their decision upon.  Some will make a hasty choice for a promised ‘simple and low’ rate that sounds good but ends up costly.  Others will take the time and dedicate themselves to an education in bank card processing.  The path I would recommend is seeking a trustworthy experienced agent that can be relied upon to increase efficiency, minimize bankcard expenses and maximize profits!

For further questions, please feel free to call Robert McBeath, CPP of Cornerstone Business Solutions at 888-979-4731 or leave a message below.

Required To Upgrade Your Credit Card Terminal? Says Who?

DejavooX8Can you imagine if you had your cell phone service with AT&T and you got an official sounding call saying that your phone isn’t compliant and you are forced to upgrade?  Fair enough, I guess phones must be upgraded.  But what if you found out that it was going to cost you?  Additionally, what if you figured out it wasn’t AT&T calling at all, but actually it was Verizon and they were going to switch your service to them?  And the icing on the cake would be if you later found out that the upgrade wasn’t even necessary!  Well, I’ve never heard of this happening in the wireless industry.  Unfortunately this trickery is very prevalent in the merchant services industry.

Again this week I heard from another one of my clients asking me about a call that she received indicating that her credit card terminal is not compliant and must be upgraded.  The caller made it seem as if he was from her current processor.  Perhaps he wasn’t out right lying, but certainly intentionally misleading her.  These kinds of calls have been happening for years, but with recent developments with increased PCI Standards and the upcoming Europay MasterCard Visa (EMV) push, they are becoming more prevalent.   In order to protect business owners from the misinformation campaigns, I’m going to explain the truth about upgrading credit card terminals.

First, a merchant needs to know how to protect themselves if they ever get a call from the merchant services provider.  It’s important to verify that they are actually your service provider.  The simplest way to do this is to ask them to verify your merchant ID number, which is typed on the side of the terminal and also on the monthly merchant statement.  It’s important that staff  NEVER volunteers this information OR the type of terminal to an unsolicited caller.

In case you’re wondering, this ploy is prevalent enough to warrant FTC charges  against one of the many companies engaging in this unscrupulous act.  It is effective because it’s thinly veiled in some truth and some companies are using this to profit at small business owners’ expense.  Most companies are using this to get a merchant to purchase or lease unnecessary equipment.  Others are more interest in getting the merchant to switch to their processing.  (Beware, I also have heard horror stories of merchants’ own sales organization selling unneeded terminals to their own existing customers!)

So, is a terminal upgrade necessary?  Short answer: no.  As long as a processor will still run transactions through a terminal, an upgrade isn’t required.  The only circumstances at this time that would require a terminal upgrade is if the terminal didn’t truncate, meaning that the whole credit card number showed up on the receipt.  The odds that a merchant still processes with a terminal that is so ancient that it cannot be programmed to truncate is incomprehensible to me.

However, an upgrade may be very beneficial for a merchant’s protection and convenience in the future with EMV (Europay, Mastercard and Visa) enabled terminals.  The U.S. is among the very last countries to adopt this more secure, smart chip based technology that will reduce fraud.  It may also be used in conjunction with NFC (Near Frequency Communication), depending on whether the terminal and card is equipped.  NFC is a convenience that allows proximity based transactions such at the highly advertised ‘tap and go’.

Although the new terminals that are EMV and NFC compatible are already being deployed, they aren’t mandatory.  It’s not until October 1st, 2015 that a liability shift occurs.  After that date, if a counterfeit card is used at a non EMV terminal, then the merchant will incur the full penalty for the losses on that transaction.  Even after that date, the existing terminals will continue to function, however some merchants may be incurring more risk than necessary.

Furthermore, when it does become necessary to upgrade a terminal, your processor will notify you by mail.  At that time, I would expect that if a merchant is in a free terminal agreement, such as the majority of my clients have, the expense of upgrading will be greatly subsidized by the Sales Organization.

As always, if you have any questions on these issues, talk to your qualified sales agent to get the facts before making a costly mistake.  If you still have doubts, contact your processor directly or seek out a Certified Payment Professional’s advice.




Are The Waters Safe?


Swimming With The Sharks?

Sometimes I lose clients to competitors.  I hate to admit it, but sometimes I can’t help but take it a little bit personal, like I didn’t do enough to keep them satisfied.  Logically, of course I know that it’s a part of business and I also know that I rank in the top 5% for retention rates in the industry.

The truth is, every one of my customers is inundated with calls from hundreds of competitors.  I know it’s a barrage of calls, mailers, door knockers, emails, online offers and so on.  There are endless enticing promises of savings and special offers as well as subterfuge all aimed at getting my customers to leave for greener pastures.  I also know that some of the merchant services salesmen out there are darn good talkers and very convincing!  I’ve also seen many written proposals and ‘savings analysis’ that were presented to merchants that are some of the prettiest pieces of fiction and fuzzy math you’ll see outside of a congressional budget hearing.

With so many competitors pounding on the doors, I am very grateful at the loyalty so many of my customers have shown me.  I like to believe that they see me as a friend they can count on more than just a merchant services provider.  I also don’t begrudge a customer that does leave, and nothing feels better than to have them return when they find the grass isn’t greener.

Last month I had a client return to me after using a competitor for a couple years.  It really wasn’t his fault that he was duped into leaving.  When he changed banks, the new bank introduced their bank card representative that was with their approved processing company.  Under this guise of credibility and creative math, the merchant was led to believe that he would see savings every month.  What he got was:

1)     A non cancellable 48 month lease on processing equipment at $69 a month.  Before he’d left (and after he returned), we provided him with a no strings, free terminal!

2)     A $60 a month gift card program that was not only unnecessary but they never even got it working for him!  When they tried to surprise him with an extra $250 in fees, he tried to cancel and they wouldn’t let him!

3)     Despite promises of huge monthly savings on the processing portion, upon returning  found that he had actually been over paying with them to the tune of $50 a month!

4)    Possible an Early Termination Fee on his merchant services contract.  How long and how much is impossible to tell, because they never gave him the contract with those details!

He contacted me for my assistance last month when he left the bank that had referred that merchant services provider.  It’s worth mentioning that although a bank can attempt to coerce a business to utilize their recommended service provider, they cannot require that as a prerequisite to their other banking services.

I really like this customer and I was glad to have him back.  I just wish he would have talked to me before he’d made the decision to leave in the first place, and I could have saved him the loss of thousands of dollars and a lot of hassles.  The sad part is, it’s not an isolated incident.  So many times I’ve seen this happen, and I know it’s just the tip of the iceberg where most customers would be too embarrassed to come back or let me know that switching was a bad idea.

I guess if there’s one thing I’d like to impress upon my customers is, just talk to me and I’ll understand.  If you are a customer of mine and about to leave, it’s probably because of one of two reasons.  Either someone is promising a better rate or we haven’t made you feel appreciated and/or met your needs.

If it’s about the rate, I’m always happy to re-evaluate an account.  Because I don’t utilize ‘hook – rates’ like many competitors, often I can find ways to lower processing fees.  Also I can always work hard to get our processor to price-match legitimate offers.  If you are a customer of mine and are looking for a change because you aren’t feeling appreciated, then I am truly sorry if I’ve failed to express how much you and your business mean to me.   My clients are the most important thing to me, and the reason why I love this business.  I take pride in the relationships I have with my customers and always enjoy talking and sharing with them.

If a customer chooses to leave for whatever reason, it’s critical to talk to me before making a contract signing mistake with a competitor in order to avoid costly early termination fees.  If a customer approaches me in advance, I may be able to help avoid a nightmare, such as above,  and also I may offer a better solution.  If I’m truly unable to help, at least I can go to bat and help make the transition process as painless as possible, and also advocate waiving any type of closing fees.  In the end, I will always let my clients know I value them and their business, so come or go, they are always welcome at Cornerstone Business Solutions!

%d bloggers like this: