Merchant Card Services Secrets - Top 10 Hidden Fees and Traps

Questions a Small Business Owner Must Ask Before Signing Up for Merchant Card Services

Small businesses can increase revenue potential and reduce bad check losses by accepting charge cards. However, merchant card services pricing isn't straight-forward and many traps and hidden fees are poised to squeeze extra money from you. These are the top 10 traps and hidden fees and what to ask a merchant card services company to avoid them.

Merchant Card Services Trap #1 - "Our unbelievably low quoted rate is for debit cards, not credit cards."

A rate under 1.50% is almost certainly for debit card credit transactions (without a PIN). The credit card rate may be 40% higher. Ask the merchant card services company what their "credit card rate" is.

Merchant Card Services Trap #2 - "Our quoted credit card rate is not the rate you'll actually pay for most cards."

Not all credit cards are created equal. As a consumer, if you aren't already using a reward card you should be. Most of your customers probably are. Merchant card services companies charge you more to cover those customers' rewards. If you've been quoted a too-good-to-be-true rate below 1.60%, expect to pay up to double for most transactions to cover your customers' perks. Ask the merchant card services company about "mid-qualified" and "non-qualified" rates. Check their Discover and AmEx rates too, as these are higher than Visa and Mastercard rates.

Merchant Card Services Trap #3 - "Our quoted rates default to the highest, non-qualified rates each time you key in rather than swipe a card."

When you swipe a card, the physical presence of the card reduces the risk of fraud. That's why merchant card services companies charge their highest, non-qualified rates for keyed transactions. Ask about keyed transactions rates.

Merchant Card Services Trap #4 - "Authorization fees are not the only way we nickel-and-dime you"