Avoid making the mistakes that can cost you thousands of dollars a year, lock you into a long-term agreement, or sell you proprietary hardware, software or a point of sale that no one else can use.
1. Not Understanding the Fee Structure
- Many businesses focus only on transaction fees but overlook hidden costs like monthly fees, PCI compliance fees, chargeback fees, and early termination fees.
- Some providers advertise low rates but apply tiered pricing that results in higher charges than expected.
2. Choosing a Processor Without Proper Security Measures
- Failing to ensure that the processor is PCI-DSS compliant can lead to security vulnerabilities and potential fines.
- Not checking if they offer fraud prevention tools like tokenization and encryption.
3. Ignoring Contract Terms and Hidden Fees
- Some processors lock businesses into long-term contracts with high cancellation fees.
- Some charge “non-qualified” transaction fees that significantly raise costs for certain card types.
- Watch out for Liquated Damages Clauses in agreements. It is one thing to have a reasonable cancellation fee, or no-fee, it is entirely another when you are responsible for paying for poor service for the remainder of the contract.
- Example: You pay on average $500.00 a month for services, but the service you receive is horrible. You have been with the company for 12-months, but signed a 36 month agreement.
- Your Cancellation fee, if you choose to change, will be 24 (months remaining in contract) times (X) $500.00. $12,000.00.
- This is not just credit card processing companies…..I have seen phone and cable companies charge these type of fees as well. If you are in Greater Orlando, read your telecommunications/internet service provider contracts. We have worked with clients to help them when they are “stuck”.
- Example: You pay on average $500.00 a month for services, but the service you receive is horrible. You have been with the company for 12-months, but signed a 36 month agreement.
4. Overlooking Integration with Existing Systems
- Choosing a processor that doesn’t integrate well with POS systems, e-commerce platforms, or accounting software can cause operational inefficiencies.
- Not verifying compatibility with mobile or online payment gateways.
- Companies will sell you a terminal, gateway or POS solution that is not compatible with another processor. If the service is bad but the hardware is good, you should look for a Point of Sale that allows you to move. After all, your credit card processor and point of sale solution should earn the business every day too!
5. Not Considering Customer Support Quality
- Many businesses overlook 24/7 support availability, which is crucial for resolving payment issues quickly.
- Some processors only offer email support with slow response times.
6. Choosing Based on the Lowest Rate Alone
- A provider offering the lowest advertised rate may have hidden fees or unreliable service.
- Some companies use bait-and-switch tactics, offering low introductory rates that increase later.
7. Not Factoring in Business Growth
- Some businesses choose a provider based on current needs without considering future expansion.
- Limited scalability can lead to higher fees or the need to switch providers later.
- If your processor is not asking about your immediate and long-term plans you may be setting yourself up for a big transition down the road.
- Ask if the processing company will swap the point of sale hardware or extend a credit to offset the new point of sale hardware cost when you have to upgrade technology.
8. Ignoring Chargeback and Dispute Policies
- Some processors have strict chargeback policies that make it difficult to dispute fraudulent claims.
- Not checking how quickly funds are released after disputes can affect cash flow.
- There are companies that offer chargeback mitigation support or reimburse you in the event you lose a chargeback when using their POS solution the exact way they train you.
9. Not Comparing Multiple Providers
- Rushing into a contract without comparing multiple processors can result in higher costs and fewer features.
- It’s essential to get quotes from different providers and compare contract terms.
- Recommend getting at least a second quote if you are starting up. Companies should be showing you a Traditional pricing stategies, Dual Pricing and Surcharge so you can decide on what is best for you. (Be sure that the payment consultant knows the state and card brand rules to ensure you are set-up properly).
10. Not Reading Online Reviews and Reputation
- Many businesses sign up with a processor without checking customer reviews and complaints.
- Researching Better Business Bureau (BBB) ratings, Trustpilot, and industry forums can help identify red flags.
- If a company does not have a lot of reviews, be sure to ask for client testimonials, locations in your industry that they work with and authorization to contact the client.
