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 of Selecting Merchant
    Account Services
                                           Learn the insider
                                         secrets you need to
      By Charles Baratta, Director     know to select the right
       Merchant Service Group            merchant account
                                     processor for your business.
 10 CoMMAnDMentS of SeLeCtinG
   MerChAnt ACCount ServiCeS
Merchant account processors provide a critical service to both online and offline retailers by
making it possible to accept electronic payments. not only does the service give you access to
a wider range of customers, it allows you to collect revenue faster without the fear of bounced
checks and unpaid invoices.

Although merchant processors provide a necessary service, the industry is secretive by nature.
There are murky regulations, complex fee structures, and a TON of fine print in most contracts.

this veil of secrecy allows some merchant processors to take advantage of their customers—
including you.                                                                                               CoMMAnDMentS
that is exactly why i have written this report—to give you the insider information you need to
select an honest merchant processor and negotiate a fair contract. Some of what you read may                  of SeLeCtinG
be shocking, but in the end, you’ll walk away armed with the knowledge you need to make an
educated decision.
You owe it to yourself and the success of your business to understand how the industry works.

Without further ado, behold, the “10 Commandments of Selecting Merchant Account Services.”                     ACCount
i. there iS no hiGher poWer in the MerChAnt ACCount inDuStrY.
the merchant account industry is a lot like the Wild West before law came to town. in the same
way that bandits and outlaws could roam Main Street freely, unscrupulous merchant processors
today can take advantage of retailers with no fear of retribution.

this happens because there is no governing body, such as the federal trade Commission, to
oversee merchant account processors. this void in oversight allows merchant processors to
misrepresent their services, advertise artificially low rates, and create contracts with ridiculous terms.

Your best protection against the outlaws in the industry is to be informed. Before signing a contract
with anyone, do your research. Call their references and check their standing with the Better
Business Bureau ( remember, a good merchant processor will have at least an
above average rating.

ii. thou ShALL not Get MerChAnt proCeSSinG ServiCeS froM A BAnk.
in attempt to save time or money, many companies ask their banks to provide merchant
processing services. they think that by cutting out the merchant processing “middle man,” they
will save money and access their account funds faster. this is not the case.

for starters, most banks don’t actually provide merchant processing services. instead, they
outsource the services to a third party and mark-up the fees in order to make a profit. Banks that
do provide processing services usually have higher fees and poor service.

in both cases, you will not have access to your funds any faster than by working with a merchant
processor. Do yourself a favor and work with a company that specializes in merchant account

iii. thou ShALL not truSt quoteD rAteS.
Beware of sales representatives who quote extraordinarily low rates. they are either distorting the            of SeLeCtinG
facts or gouging you with fees in other areas.
                                                               Section i
Many processors claim rates as low as 1.19%. What they are not telling you is that the 1.19% rate is
for debit card transitions only, whereas the cost for credit card transactions is 46% higher at 1.74%.
Considering that credit card transactions account for over 60% of all transactions, your true costs
will be much closer to the higher rate.                                                                         ACCount
if the rate sounds too good to be true, it probably is.
iv. thou ShALL ASk ABout SurChArGe, pArtiALLY-quALifieD, AnD
    non-quALifieD feeS.

in addition to charging the standard discount rate for credit card purchases, many merchant processors tack
on an additional charge to process reward cards, business cards, international cards, and more.

These fees go by many names (surcharge, partially-qualified, and non-qualified) and are rarely explained to
a merchant when an account is first setup.

These fees can be very expensive so ask specifically about them before signing any contracts.

v. thou ShALL ASk ABout WAitinG perioDS to ACCeSS funDS.
have you ever wondered why it can take days, or even weeks, to withdraw money from your
merchant account? As scary as it sounds, it could be because your money is not there. A surprising
number of merchant processors make money on the side by investing Your money in overnight

to protect yourself, learn exactly how and when you can access your funds and look for a
merchant processor that will directly deposit your funds within 12 – 24 hours. Also, be aware that
some merchant processors charge higher rates and fees to make funds available in 12 – 24 hours.

vi. thou ShALL Meet the MonthLY MiniMuM feeS (or pAY the priCe).
A monthly minimum fee is a pre-determined amount that you must pay each month in transaction
fees. if your sales are low one month and you don’t hit the minimum, your processor will charge you     CoMMAnDMentS
the difference.

Just like with early termination fees, monthly minimum fees are an industry standard although            of SeLeCtinG
amount can vary significantly between processors. Keep monthly minimum fees in mind when
                                                           Section i
shopping for a merchant account plan in order to keep overhead expenses in check.
vii. thou ShALL reAD the fine print ABout eArLY terMinAtion feeS.
there is one thing people hate more than early termination fees—and that is SurpriSe early
termination fees. Just ask anyone who has had been nailed with one from a company that claimed
not to charge them. To avoid surprise fees yourself, read the fine print of your contract.                 ServiCeS
early termination fees are standard in the merchant processing industry. however, many merchant
processors advertise $0 early termination fees to attract customers. to recoup the lost revenue, they
charge a “pro-rated contract fee” instead. here is how it works.

Say you sign a two-year contract and terminate it after one year. the merchant processor would
calculate their average monthly profit from your account (let’s assume $100 / month) and multiply
that by the number of months remaining on your contract (12) to calculate the balance on your
pro-rated contact. under this model, your “early termination fee” would technically be $0 but your
“pro -rated contract fee” would be $1,200.

that is a lot more than the standard $250 early termination fee!

viii. thou ShALL Get AnnuAL fee AGreeMentS in WritinG.
to get you in the door, many merchant account processors will waive your annual fee. What they
don’t tell you is that this is a one-time service and that you will get charged the following year. the
fee can range from $95 to $150. if a merchant account processor tells you that your annual fee is
$0, get it in writing!

iX. thou ShALL unDerStAnD thAt nothinG iS free.
how many times have you heard that there is no such thing as a free lunch? And yet, thousands of
consumers still purchase overpriced products and sign unfavorable contracts simply because they
cannot resist the lure of a “free gift.”

Merchant account processors are especially notorious for luring new customers with offers of gifts,
such as credit card scanners and equipment. if you retain nothing else from this report, remember
this. nothinG iS free. Companies that give you free equipment are making up for the expense by
inflating prices in other areas.

If you read the free equipment addendum carefully, you will probably find that if your equipment is        of SeLeCtinG
                                                             Section i
not returned within 30 days of cancellation in mint condition, the merchant processor can fine you
up to $2,000. plus, if you fail to pay for unreturned or damaged equipment, the merchant processor
can sue you in their home state. that sure sounds like an expensive “gift” to me!
X. thou ShALL requeSt DetAiLS ABout “free” SuppLieS AnD WArrAntieS.                                         ACCount
Because consumers respond so positively to offers for free gifts, many merchant accounts provide
free supplies and equipment warranties. have the company specify eXACtLY what they mean by                   ServiCeS
“free supplies and equipment warranty.”

it very well could mean that you are only entitled to one roll of paper per year and a one-year
manufacturer’s warranty.

Selecting the right merchant account processor for your business is critical to your financial success
and understanding how the process works will ensure that you make an educated decision.

if you’d like to learn more about Merchant Service Group, the company that wrote the proverbial
book on selecting merchant account services, visit


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