Wednesday, June 29, 2011

Square Credit Card Processing Raises $100 Million

The NYT is reporting that the mobile credit card processing company "Square" has raised a whopping $100 million in in a financing round led by Kleiner Perkins Caufield & Byers. As part of the deal, Mary Meeker, a partner at Kleiner Perkins, will join Square’s board.

“Square has a great product with extensibility which we believe has the potential to have a lasting impact on how people make payments,” Ms. Meeker said in a statement. “Square’s product is fast, easy and fun for both consumers and vendors; a small business can be up and running within minutes.”

There is little doubt that although this space within the merchant service industry is getting a bit crowded, Square is a force to be reckoned with. As I've mentioned the problems with square is that many don't fully comprehend it's limitations. They are great for someone with a very small side business but for serious vendors a traditional merchant service company is what they need.

Wednesday, June 22, 2011

Don't Get Fooled by Credit Card Processors!

A great article is written here on the 5 deceitful practices by merchant service providers.

Tactic #1: The “Rate Game”

There is no question that without looking at your actual merchant statement no one can tell you they
can actually save you money or even how much. Yet many people get calls such as these and are duped into believing they will. Some switch only to pay even more! This is because of hidden fees and contracts that many processors will try to lock you into without your knowledge.

Tactic #2: The Binding Contract…

Another trick processors use is to lock you into a 2,3, or even 5 year contract – without verbally telling you they’d done so. Sure, you could have found it somewhere in the details of your processing agreement, but it’s rare for someone to read page after page of small print “legalese” when jumping through all the hoops of filling out a contract and listening to a well skilled, friendly salesperson.
Similarly, at the end of the original contract term, another devious trick is to include a clause somewhere in the contract stating that unless the processor is notified in writing at least 30 days prior to the expiration of the original processing agreement, the contract will automatically renew for a period of 1 year.
A good solution is to find a processor with NO BINDING CONTRACT. Which leads to the next problem…
Tactic #3: Early Termination Fees
Competition is fierce. In an attempt to lower or eliminate high merchant turnover processors have added Early Termination Fees (ETF’s) to the fine print of their contracts. ETF’s ‘fine’ a merchant if they decide to switch processors before the contract terms are up.
The problem with ETF’s is that it gives an unscrupulous processor power over their merchants. Many of them use this clause as a green light to abuse their customers, knowing most merchants will give up an attempt to leave and go to a new processor once they’re made aware that by contractual agreement it’s going to cost them money.
A good solution is to demand, in writing, a contract with NO EARLY TERMINATION FEES!
Tactic #4: New PCI Fees
While it is true that merchants need to be in compliance with Payment Card Industry Data Security Standards (PCI-DSS), most Level-4 merchants are able to achieve compliance without too much difficulty. As long as they use PCI compliant hardware and software, and don’t store sensitive cardholder information, most of their PCI issues are resolved.
Yet credit card processors have almost universally seen fit to require a monthly, quarterly, or yearly “PCI compliance fee” (which really amounts to nothing more than a new ‘annual fee’). At the same time, processors rarely, if ever, do anything to educate their merchants about PCI. Instead, they simply slap them with a new fee which shows up on their statement as being “for PCI compliance”. No wonder merchants get so angry.
Solution? Find a processor that’s committed to educating their merchants on the important issues of data security, and doesn’t require an arbitrary “PCI fee”.
Tactic #5: The Bewildering Statement
Another tactic processors use is in the format and content of the processing statements mailed monthly to each merchant to summarize their card activity. The majority, from what I’ve seen, look as if they are designed to confuse, rather than disclose the rates and fees paid for the month.
Some even go so far as to hide certain fees, or even completely eliminate disclosing what they are. When a processor doesn’t reveal fees on a statement it’s usually an attempt on their part to prevent a competitor from going over it and coming up with a competitive analysis.
While it does protect the processor, it does so in a way that seems highly manipulative. If a processor is fair, open and honest with a merchant then THAT ALONE will go a long way in preventing merchant turnover. Why would a merchant leave a processor that was open, fair, and honest to go with a new one they didn’t yet know if they could trust? Highly unlikely.
The solution is to ask to see a processors statement before going with them. If it looks like it’d take a semester in college to read you may want to keep looking for a processing company with nothing to hide.

These and more are just some of the reasons many merchants have chosen a merchant service provider such as Prestige Merchant Services. They are one of the few companies that advertise clearly "No contracts". the statements are easy to read so the merchant clearly understands what they are paying and why. Interested in finding out how they compare to your merchant provider? Simply fax them your full statement at 832-203-1974 and they will analyze it for savings with a line-by-line comparison.