Payment processing companies are a vital part of a business but, choosing the wrong one could end up getting you a lot more trouble than you bargained for. Whether it’s hidden fees, equipment rentals, or too good to be true interchange fees, business owners need to do due diligence before signing up. Here are some red flags to look out for when picking payment processing companies.
1. Matching rates. If the company offers to match rates with another vendor, this is an instant red flag. It means they meant to overcharge you in the first place, and once they think you have let your guard down will probably overcharge you again.
2. Transaction limits. Does the company have a minimum number of transactions that must be processed each day? Does the company have a limit on the dollar amount of transactions that can process in one day? Does the company impose additional fees when these limits are not met or exceeded?
3. Equipment rentals. It’s cheap to buy a point-of-sale system or just a straight-out credit card machine for just a few hundred dollars. While it might seem like a way to save a little money when starting out, this can turn into a monkey on your back and leave you with an old piece of equipment. If a processor tells you that they will not do business with you unless you lease equipment from them, find another processor.
4. Cancellation scams. Legitimate companies do charge termination fees as a way to prevent losses. Other payment processing companies charge them as a way to make money when a customer terminates the business relationship for poor service. It’s not just little fly-by-night boiler room operations, but even big “reputable” banks like Wells-Fargo and its merchant services division.
When you’re looking for a reputable payment processing company choose one with lots of experience, a roster of services, good reviews, and an open and transparent way of doing business.