The truth about Intuit Go Payment

The bottom line is this:


When things look to good to be true, they usually are.


Here is what an Amazon reviewer stated about Intuit Go Payment:

I got this app as it seemed to have more competitive pricing than Square. For a $12.95 monthly fee I am in the lowest rate program available: 1.7% for swiped transactions, and 2.7% for manually entered. However, I am always charged between 2.7 and 3.7% plus a transaction fee. The reason given is that the cards I am charging are "reward" cards of some type. So I get charged the low fee and at the end of the month every transaction I have ever made has at least 1% added to it. I know many of these card are not reward cards, although the vast majority of cards nowadays are. Customer service has been as pitiful as other processors I have used. 




These are just some of the reasons to use a reliable merchant service provider who will not hide fees and lock you into a contract.

Beware of Bait and Switch Rates!

As mentioned previously, when  looking for a competitive deal on a merchant account, beware! It's good to know that I'm not the only one warning people about the pitfalls of "teaser rates". Like anything in life, "if it's too good to be true, it probably is". If you have learned nothing else from reading this blog it should be this: Never sign a contract! The rate should also not be the only determining factor in which merchant service provider you choose. A merchant account is a very important aspect of your business and if something goes wrong, you want to know you are dealing with a company that can service you well and quickly. It is very unusual to get the deal you are sold and that's because the hidden fees will keep you in the dark. Make sure you do your homework and pick the company you are most comfortable with. This will help you in getting a true
deal on credit card processing.

Merchant Service Providers: What Have They Done for You?

Most credit card processors are good at one thing: deception. This is one of the main reasons I started this blog. I wanted to expose the myth of what businesses think they are getting as opposed to the deal they actually got. As I mentioned previously, most companies really don't know what they are truly paying as the statements you receive seemingly require a forensic accountant to figure out. There is a reason the majority of provides have a 3 yr contract that they may or may not tell you about. They don't want you to know about all those hidden fees and they are hoping if you do figure it out, it will be too late as the contact has you locked in.


All this aside, what are these processors really doing for you other then eating into your bottom line? Prestige Merchant Services is the only merchant service provider that offers a way to expand your business at no cost to you. They offer free SEO (search engine optimization) consultations which can be essential especially for small and medium sized businesses. Perhaps you have a nice website but how easily can you be found online? Are you on the first page of Google for all the major keywords in your industry? These are just some of the questions Prestige can assist their customers in. Need a website? Let Prestige assist in setting one up for you at a very competitive rate. This is truly ground breaking within the industry and you should be sure to contact them for more information.

News: Small businesses are getting ripped off

Fox News has an article and video that discusses how small businesses are getting ripped off bycredit card processors:

"I'm almost embarrassed I fell for their scam," said hair salon owner Magic Munson. 

She was approached by a salesman representing a company called Payment System Corporation who promised the halve her costs for processing credit cards and debit cards. It's a strong pitch to small businesses that are struggling in a bad economy.

But after she signed up, the company couldn't help her hook up several card swipers. She began getting bills even though the machines weren't hooked up.  The salesman was nowhere to be found and the friendly faces pictured in a list of customer service representatives were missing in action.

"If you try to call any of these people, they'll put you on hold. It's a fight to talk with a real person. i was on hold for 20 minutes (once) and after 20 minutes, they just hang up the phone.  She also began getting bills for services that she never used and was denied refunds that were promised.

There are  a 2 things one should take from this article that differ from what the article implies:

1) Never sign a contract! If there is no contractual obligation you will never have an issue going elsewhere, which should make the company you are with bend over backwards to keep you business by servicing you and doing it well. It will also make it less likely that they are hiding fees.

2) If the rates you are being quoted seem to be good to be true...they probably are.

Rates like 1.09% for credit cards are simply impossible as that is below the actual cost.

Be careful out there and only deal with the most reputable company.

Although few companies have  a no contract policy a merchant service provider that advertises as such is Prestige Merchant Services.

Interchange Plus Pricing: Not Everything?

Another great article by credit card processing veteran Phil Hinke:

I am a strong advocate of interchange-plus pricing. To date, I have allowed only merchant account providers that offer interchange-plus pricing to bid for my clients' business. However, I am also concerned about how some providers and salespeople appear to be pitching interchange-plus pricing as a panacea for ensuring merchants are being priced fairly. Therefore, I decided to turn last month’s article into a 3-part series on interchange-plus pricing — so merchants can see that while interchange-plus pricing can be important, it does not automatically guarantee fair pricing. 

This article is the second installment of that series.

Interchange Plus: 2 Things to Understand as a Merchant 

First, card processing is a very perplexing and convoluted industry. You can have, say, 30 different customers use their debit or credit cards to buy the same product at the same price on your website, and you theoretically could be charged 30 different processing rates. This is one of the reasons why a clever salesperson can offer what appears to be a good processing rate — and ends up being anything but that.

Second, don’t expect a salesperson to offer you the best possible price. If you are currently overpaying for processing by $20,000 per year and the salesperson thinks he can entice you into changing providers for $5,000 in savings, he may offer you a rate that saves you $5,000. There is nothing wrong with this type of sales approach. Merchants — like credit card salespeople — want to make as high a profit as possible. However, this perplexing and convoluted industry puts merchants at a disadvantage in the negotiations, which is the reason for my articles here each month. 

An Actual Interchange-Plus Example 

I have worked with several merchants recently that were offered interchange-plus contracts. Fortunately, they understand that interchange-plus pricing was not necessarily fair. As a result, each eventually received — after negotiations — far better pricing and terms and conditions than originally offered. Here is an example of one such merchant. 

This merchant was with one of the largest merchant account providers. The merchant was on a tiered pricing schedule — I explained tiered pricing in a previous article — and was grossly overpaying for the service. Its provider offered interchange-plus pricing at 0.31 percent plus $0.05 plus normal fees, all of which would save more than $100,000 over three years. As impressive as this may sound, in fact there were three problems with this offer.

First, the merchant was overpaying by more than $175,000 during that timeframe. The provider thought it could wow this merchant into thinking that the savings it offered would keep this merchant. However, after negotiating, the merchant ended up getting pricing at 0.07 percent (versus .31 percent) plus $0.08 plus normal fees, which saved the merchant the additional $75,000 over three years. Both rates were interchange plus, but only the latter pricing was fair.

Second, the provider included a “liquidated damages” clause for early termination. I encourage my clients to never sign a contract with a liquidated damages clause. Depending on the specific verbiage, it could cost thousands of dollars to terminate the contract early. In fact, I know of an ecommerce merchant who was forced to continue processing with his provider — or pay several hundred thousand dollars to terminate early. It should never cost more than $400 to terminate your contract early. 

Third, the provider was charging its processing percentage on returns. The provider charged the merchant 3 percent to process a $1,000 sale with a specific card type; the merchant paid $30 in processing for the sale. If the customer returned the goods, the provider would charge an additional 3 percent to reverse the credit card charges. Therefore, the provider received $60 and the merchant had a net sale of zero. There is no reason why a merchant should pay a processing percentage for refunds — other than it’s another way a provider can make money without the merchant understanding he or she overpaid. I know of one ecommerce merchant that was paying $6,000 per year in refund-processing fees.

An Important Interchange-Plus Question to Ask

I now see merchant account providers increase their fees or add new fees, while at the same time claiming to be passing through all of the Durbin Amendment debit-card interchange reductions. This does not seem right to me. Yes, they may be passing on the lower debit interchange rate. However, if at the same time they are taking more money out of the merchants' pockets with new or increased fees, are they really passing through all of the Durbin Amendment reductions? Are they really any different than the provider that is not passing through all the Durbin Amendment reductions? 

So, one of the questions I ask the salesperson during the negotiations is simply “Has your company increased any fees or added any new fees over the last year? If yes, explain why.” This is a question of provider integrity that each merchant should ask. I am not saying that the provider isn’t justified in increasing or adding new fees. However, all merchants should ask this question during the pricing negotiations. 

Conclusion 

In summary, remember these seven points when you negotiate an interchange-plus contract. Interchange-plus pricing is not a panacea. The card processing industry is perplexing and convoluted. Do not expect the salesperson to offer you the lowest rate. You need to work to get it. Do not be wowed by a large savings amount, as there may even more savings left on the table. Do not focus on just the rate. Understand, also, the fees, funding, and terms and conditions in the contract. Avoid liquidated damage clauses. Ask the tough questions during negotiations.

Debit Card Scam from Processors

(Via Bloomberg) The Federal Trade Commission said Friday that it is paying some $350,000 in refunds to 100 small U.S. merchants that were defrauded in a debit and credit card scheme. The scheme involved several firms that falsely promised they would save small businesses money in credit and debit card processing fees by offering lower rates that those of other card processing services. However, the firms failed to disclose fees and concealed pages of fine print until after the merchants had signed contracts for their services, the FTC said.

The FTC identified the firms that perpetrated the scheme as Merchant Processing Inc., Direct Merchant Processing Inc., Vequity Financial Group Inc. and PPI Services Inc. Also involved in the scam were Aaron Lee Rian and Karely McCarthy, also known as Karly Speelman, the FTC said. The agency reached settlements with Rian and McCarthy that banned them from marketing card processing goods or services for sale or lease. Certain of their assets were sold to provide funds for the refunds, the FTC said.Merchants due to receive refunds were to get between $100 and more than $25,000, depending on how much the merchant paid, the FTC said.

More Deceptive Practices to Watch Out For

If you are not aware by now from reading this blog the credit card processing industry is one of the most deceptive. Most of the time  "what you see"  is not "what you get". In this article Phil Hinke describes some more of those very deceptive practices among sales people in the industry and how they hurt merchants:

I have seen merchants deceived on the actual discount rate they received. I have seen merchants deceived on the "terms and conditions." I have even seen a “1” in the discount rate on the merchant application mysterious change to a “7” after the merchant had signed the agreement. 

Most processors will attempt to lock you into a contract because they have hidden fees they simply don't want you to know about. They also have statements that are impossible to understand because they want to keep you in the dark. Make sure to stay clear of those problems so if something does arise you can leave without penalty.