In our 10 years of operation, DirectPayNet has heard its share of horror stories about bad merchant services and the companies that promise unrealistic solutions.
Merchants in high-risk verticals can be so desperate or eager to scale, they forget to conduct due diligence on their merchant account or payment solution provider. Unfortunately, they resort to signing with merchant account providers who lack credibility and are straight up fraudsters. Yet many entrepreneurs fall into the trap.
Sometimes news headlines often focus on scams by merchants. But there are plenty of stories about bad merchant account providers.
If you sense you aren’t getting what you need from your current payment facilitator, there’s a good chance something is off.
Horror stories emerge detailing the practices of bad merchant services
There have been increasing instances of poor – and in some cases illegal – practices when it comes to providing merchant services. One of the most common practices is pretending to be a licensed partner with an acquiring bank or credit card company.
By offering cheaper rates than what merchants currently pay, many business owners are convinced to sign up.
But often there is an overflow of undisclosed rates and fees. Merchants unknowingly commit to 12, 24, and sometimes even 72-month long contracts. It’s only after they start processing do merchants realize they’ve signed up for a bad deal. Then, they are charged severe early termination fees (e.g. $600) to get out of them.
These providers deliver skeleton services for astronomical prices. A lack of attention paid to chargeback management leaves victims high and dry with too much risk.
Signing up with some of these quick-fix credit card processors can be a one-way ticket to a MATCH-listing too.
In worst-case scenarios, bad merchant service providers can literally disappear overnight. Taking a merchant’s money with them. It’s not usual for them to then appear with a new name a few months later.
With such possibly disastrous results, it’s crucial that you look for the telltale signs of a payment processor worth their salt.
Do you realize that there are several ways merchant rates can spike above the ones advertised when you first signed up? Click here if you want to learn from our expert team on how to find the best rates for your business!
The Telltale Signs of a Good Merchant Services Provider
It pays to do your due diligence before signing up with any service providers of this nature.
Here are five telltale signs that your payment processor provides what they claim they do:
1. Merchant Portal Login
This is something that should be provided by the acquiring bank behind the merchant account. Once inside the portal you should be able to view real-time reporting of transactions. Without the ability to do so, you have no way to manage your chargeback and fraud ratios.
2. Monthly Processing Statements
All reputable processors provide at least weekly or monthly processing statements. If they don’t, you won’t have any processing history to fall back on should the worst happen and you need another merchant account fast.
3. Frequent Payments
One of the best signs of a good processor is frequent payments. You should receive them at least weekly if you’ve got decent processing volumes. The worst providers are notoriously slow at handing over money. In some cases, they never do and disappear with your money in the process.
4. Good Public Reputation
In the current world of fake news and reviews, you need dig a little deeper into the provider in question. Head to a trusted resource such as the Better Business Bureau. Reputable business with have a profile and good rating with them. Devious providers registered with these types of agencies can’t keep their noses clean for very long.
5. Dedicated Customer Service
Another huge indicator of a payment processor’s credentials is their customer service. Do you have a real, local telephone number that you can call and speak to a real person? Does their company exist? Do they respond to emails? If you can’t get in contact with customer services, it’s probably a good idea to steer clear.
Merchants can protect their business from poor merchant service providers
In some instances, merchant account providers can pass your initial checks. Yet you still feel something isn’t right. If this is the case then here are some strategic steps to protect your business.
Firstly, constant communication is key. Pick up the phone once a week to check in. It will give you peace of mind that your provider isn’t going away anytime soon. It’s also helpful for them to be kept abreast of any changes that may be taking place within the business. When rocky times hit, you need your service provider to get in the trenches with you. If they’re never available, find a new supplier.
Next, consider diversifying your bank relationships. Don’t throw all your “eggs” in one basket. By having a back up or a few back up merchant accounts to support your offers, you prevent bottlenecks caused by a being suspended or shut down.
Fraud and chargebacks are your worst enemy when it comes to keeping merchant accounts healthy. Leading banks and card networks are working with merchant service providers to provide state-of-the-art anti-fraud tools.
If your provider can’t facilitate these tools, it could be a sign that you don’t have good support.
Merchant services providers don’t always deliver on their promises
High-risk merchants are often swayed by the promises of less expensive fees to process debit and credit card transactions. However, they can often sign themselves into hidden prices, deceptive contract terms, and a skeleton service that leaves their business open to huge risks including account termination.
It always pays to undertake due diligence. Focusing on customer support levels, public reputation, and access to key real-time information. Similarly, if a provider is beginning to hold on to payments for lengthier periods of time, it could be a telltale sign of what’s to come. You need to take action before the worst happens.
DirectPayNet uses it’s expertise to create strategies for clients with merchant accounts that are on the brink of a shutdown.
We are also experts in securing more affordable merchant processing rates for your business that you can trust.