Informing, Connecting and Branding Professionals and Entrepreneurs
Nearly every merchant who wants to accept credit or debit cards will end up getting a merchant account. However, there are risks involved that merchants should be aware of in order to avoid falling victim to a merchant account scam. It can help not only to understand how a merchant account works, but also the common scams out there at this time.
A merchant account is a type of account usually held through a bank or provider service that allows merchants to accept credit or debit cards as payment for their goods or services. Although it is called an account, it is much different than a checking or savings account. It is more like a contract between the merchant and the merchant account provider, including rules defining how products can be paid for, bought and sold. Anything outside of the parameters set by the agreed upon rules is considered fraud.
Common Merchant Account Scams
Most merchant account scams are not necessarily criminal in nature, but rather involve partial scams or dishonest practices on behalf of the merchant account provider. Banks are the safer choice when it comes to merchant account, but there rules are often more stringent and they charge higher fees. Merchant account providers bridge the gap between the merchant and the merchant payment processing service in order for the merchant to receive payment from each transaction. A partial scam may involve hidden charges and fees not revealed to the merchant and buried in the fine print of the contract. One of the most common scams is the account termination fee. The provider will often charge an unreasonable fee for terminating your account. This allows them to get as much of your money as possible. As soon as you realize they are charging fees that are higher than you are willing to pay, you cannot cancel your account or they will charge the termination fee against your merchant account.
There are also multiple hidden charges that a merchant must be aware of in order to avoid. These may include technical support fees, charge back fees, retrieval charges, account cancellation charges, minimum transaction charges, maximum transaction charges, over the limit fees and many more. The best way to avoid these fees and charges is to ask point blank questions and read everything available. Contracts are designed to be hard to read and confusing for the average person. Ask for the contract ahead of time and read it over thoroughly, if there is anything you do not understand or think sounds suspicious, you may want to consider consulting with a lawyer.
Advertising is another weapon used against merchants. It is essential you scrutinize any claims made by advertising on behalf of the provider. Many merchant providers promise low introductory prices without fully revealing how much the charge will be after the introductory period expires. Another common advertising claim is offering zero set-up charges or greatly reduced fees, but this usually is a distraction from all the other higher than average fees the provider is charging. Always find out what you are going to be charged apart from the advertised offers, how long the offer lasts and what your charges will be after it does expire.
Being aware and knowing what to expect is one of the best ways you can avoid falling for one of the many merchant account scams levied against business owners. Reading forums, merchant account provider reviews, checking the history of the company, how long they have been in business and checking with accountability places like the Better Business Bureau can also increase your chances of finding a good and reputable provider.