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What are the REAL costs & liabilities of accepting credit cards?
Have you read ALL the small print on the
Merchant Agreement you MUST sign BEFORE your
business can accept credit cards? If not,
you may be in for many costly surprises...
Set-up Fees. Can range from $40 to $300 just for processing
your
merchant application.
Monthly Fees. Depending on whether you want to process
credit cards at a retail location (card
present),
by phone, via the internet or all 3,
monthly
fees range from $25 to $100.
Annual Fees. $75 is what one major provider charges.
Others may be
more or less.
Contract Cancellation Fees. If you decide to change merchant
providers, which you might do if you find
better rates, you might be forced
to pay a $395 Termination Fee in the first
6 months or $295 after six months.
All your bank accounts are exposed. Most merchant agreements allow the provider
to take money from your business OR
personal
bank account(s) for ANY fees or chargebacks
they decide are unpaid AND, they can
do this
without your prior consent or knowledge.
They can also search for bank accounts
in
your name and take the monies from
those
accounts.
Reserve funds. You can be forced to set aside or pay monies
into an account to cover any possible
chargebacks.
The length of time for the reserve
fund is
also dictated by the service provider.
Inspecting your home or business. Service providers can insist on inspecting
your business premises or your residence
if you operate a home-based business.
They
can do the inspections before and during
the length of your contract.
Limiting amount of your transactions. Service providers can limit the dollar amount
of each transaction, number of transactions
you process and the total dollar volume
you
submit.
Waiving your legal rights. Most merchant agreements state that in the
event you have a dispute, you must
fight
your legal battle in the home state
of the
service provider AND you must agree
to arbitration.
Even if you sell your business, the
agreement
may state that you are still personally
liable
for any chargebacks and "any other
liabilities."
Terminal Fees and damage to your credit. You may be forced to sign a multi-year lease
or purchase contract to pay $THOUSANDS
for
a tiny calculator-sized credit card
terminal
that's worth a few hundred dollars.
If you
try to cancel the contract and have
even
returned the equipment, the leasing
company
will come after you personally. They
intentionally
damage your personal credit for years
to
come. Leasecomm, one of the major leasing
companies, sends false information
to credit
bureaus to continue damaging your credit
for years beyond the legal limits set
by
the federal government.
Chargeback Fees. As a consumer, you may already know how
easy it is to dispute a credit card
charge.
When a charge is disputed, the merchant
may
immediately be charged a fee of $20
or more
AND the entire amount of the sale is
immediately
withdrawn from your bank account without
your knowledge or permission. You may
have
to wait days before an envelope arrives
in
your mailbox with the details of why
the
funds were deducted from your bank
account. In addition, if you (merchant) elect to
fight a chargeback, you can be charged
additional
fees of up to $400 for handling the
dispute.
No time limit on chargebacks? Although our research and knowledge of federal
law disagrees, we were recently told
by one
major bank that their credit card customers
can dispute charges ANYTIME they want
in
the future AND can refile disputes
if they
don't like the outcome!
Checking Account Change Fees. $25 is what one major provider charges if
you want your credit card monies sent
to
a different bank account or you change
banks.
Others may charge more or less.
Business Name Change Fees. $75 is what one major provider charges.
Others may charge more or less.
Credit Card Transaction Fees. These are applied to EVERY transaction
you process by terminal, phone or website.
Fees range from $.10 to $.50 per
transaction.
Reject Fees. $15 per rejected transaction.
Batch Header Fees. Additional fees for presenting each deposit
of one
or more sales.
Customer Service Fees. $12 per month is what one major provider
charges.
Documentation Fees. $2.00 per page for providing documentation.
Statement Fees. $10.00 for the "privilege" of
them sending you a detailed monthly
bill.
Discount Fees. The is a percentage of EVERY transaction
typically ranging from 1.5% to 7%.
Percentage
varies depending on your type of business,
average sale amount and whether customer
signed a credit card slip (also known
as
"card present") or you processed
the sale by phone, website or other
means.
The amount also varies depending on
the credit
card used. VISA and MasterCard typically
offer the lowest rates. American Express
is usually the most expensive.
Authorization Fees. You must obtain authorization for ALL credit
card
sales. If for any reason you can not obtain
it electronically, you may be
charged up to $1.75 for each phone authorization.
Gateway Fees. You may be charged $179 or more in advance
for access to a website that can provide
credit card approvals. You may also
be charged
$25 per month or more depending on
how many
times you use the gateway for approvals.
Based on customer comments and our own experiences,
the worst credit card service provider
is
Cardservices International. Beware:
Cardservices
International has agents all over the
country
and all over the internet. The agents
or
sales reps operate under many different
names.
You may not realize it's Cardservices
International
until you are signing the merchant
agreement.
BOTTOM LINE: For small businesses, all these fees &
liabilities can easily equal or exceed
the
profits you would gain by accepting
credit
cards. Although this list seems extensive,
it is not the complete list of fees
and restrictions
that may be imposed upon your business
and
you personally. The most recent Merchant
Agreement we examined was 46 pages
long,
not including a number of addendums.
These are reasons why businesses have discontinued
accepting credit cards and
many have switched to ChecksNet. ChecksNet has NONE OF THESE FEES, PERSONAL
LIABILITIES, LONG-TERM CONTRACT COMMITMENTS
OR INVASIONS OF YOUR PRIVACY.
If you MUST accept credit cards, there
is one bit of good news. Unless your
Merchant Agreement says otherwise, you
CAN offer a discount to anyone paying
you by cash or ChecksNet.
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