4 Ways to Save on a Merchant Account

Brian Waldman

March 8, 2010

4 Ways to Save on a Merchant Account

Almost any business can now accept credit cards with little to no start-up costs.

So how do you make sure you are getting the lowest costs for the long run?  Following are four ways you can save money on your credit card processing, and avoid frustrating traps.

1) Don’t Sign an agreement with a long-term commitment!

Signing a contract or an agreement with a term and termination fees commits you to staying with a processor regardless of your satisfaction or pricing changes.  Many times these fees are hard to find in an agreement so check if there it a term listed and then find charges for cancelling before the termination date.  Don’t take “we never charge that” as an answer from a sales rep.  If it is in writing, they will charge it.

  • Cancelling in the midst of your term means paying a steep termination fees or remaining monthly fees, many times up to $1,000.

2) Never Focus Exclusively on Percentage “Discount” Rates.
Companies who quote extremely low rates are usually trying to distract you from ‘gotchas’ that will have you paying much more in the long-run.  Almost all processors have the same general costs so if something seems much lower, assume they are taking a loss to recoup revenue somewhere else.

  • Getting the lowest rates doesn’t necessarily mean that you’re getting the best deal.  Remember, the different between tenths of a percent are almost immaterial.

3) Look to Save on Processing Equipment. 
Most equipment can function with any processor and costs have declined dramatically.  Many companies now even offer free applications for processing on an iPhone, Blackberry, Android and Windows Mobile platforms or over the Internet.  There is no reason to pay a lot out-of-pocket if your processing needs are basic.

  • Never lease equipment. Leasing is extremely costly, and involves long-term agreements.

4) Ensure You Have the Right Type of Merchant Account for Your Business.
There are different types of merchant accounts based on the way credit card transactions are accepted. It is always cheaper to have the right merchant account type for your business.

  • Always work with a firm that can explain the differences between the different merchant account types and which asks questions about your specific processing environment.