High risk merchants who need a merchant account often fall for empty promises like ludicrously low rates and fees, approvals on the spot or free use of a payment gateway.
Sometimes shopping for a merchant account can eerily resemble the seven deadly sins:
- Pride (The merchant thinks he can get lower rates and fees)
- Greed (Bargaining for lower rates and fees)
- Lust (Looking for an instant approval)
- Gluttony (Exceeding volume limits)
- Sloth (Falling short of minimum processing)
- Envy (Can’t get the same rate as a merchant colleague)
- Wrath (Merchant account shut down by a bank)
Unfortunately, merchant accounts are not all-encompassing. There is no one size fits all solution. It takes a conversation with your merchant account provider and transparency.
7 Red Flag Offers to Watch for When You Need a Merchant Account
1. Minimum prices: All merchants want the best deal they can get — understood. We’ve seen advertisements for free merchant accounts and the lowest rates, which we view as warning signs. You may not be paying much at first, but unscrupulous merchants may try to tack on back end fees. Each merchant is unique. Find a merchant account provider which grants approvals contingent on many factors such as the product/service, payment acceptance method, chargeback rate and volume.
2. Hidden fees: You deserve to know all of the fees you’ll be charged — and why. Common merchant account fees include the per transaction fee, chargeback and refund fees (which we can help you avoid), discount rate and a monthly statement fee from the acquiring bank. When merchants turn to Instabill, they don’t pay a dime until they earn an approval from the acquiring bank with which we match them.
3. Cash reward: The merchant account provider might offer a cash back reward or a signing bonus, but later hit you with ‘other’ fees to break even. Therefore, proceed with caution. In November, we began offering our network of partners a possible cash back bonus for leads on high volume merchant accounts that led to processing transactions.
4. 24-hour support: Round-the-clock support is great if it is offered properly (i.e., by the provider, not a call center). Rather than advertise 24-hour support, we advertise our hours – Monday-Friday, 8 a.m.-6 p.m. US eastern time – with the promise that all inquiries after hours will be addressed the very next business day.
5. No setup fees: Some merchant account providers may waive setup fees – that is entirely possible. We advise businesses who need a merchant account to keep a keen eye on other potential fees they might be charged in lieu of setup fees.
6. Immediate approvals: No such thing. The offer of ‘immediate approvals’ likely means the merchant account provider has approved your business. The acquiring bank through which you process transactions, however, is a completely different matter. Banks want to see a list of KYC documents before they grant an approval.
7. Free services: The offer of free perks and services (like a payment gateway) is great, but merchants should be wary that somewhere there is a catch.
The Best Merchant Account Providers Start with a Conversation
Before a discussion of approvals, rates and fees, Instabill merchant account managers want to find out more about your business. Let’s get that conversation started at 1-800-530-2444 or by clicking the live chat option below.