The Blog

Payment Processor Scam #1 Against Merchants

Scam Alert

It is scandalous to me that some who represents a financial institution like a merchant services processor would lie, trick and scam a prospective merchant for its services! But this appears to be the norm. Electronic Money Company is definitely the exception in the industry.

Scam #1: The Fraud of Lack of Disclosure

At the start of a conversation with a payment processor, always the question from the merchant is, “What is your rate?” Unknown to the merchant, there are so many variables determining the rate, that this question cannot be answered simply. If it is, then that salesperson is starting a fraudulent scam against the merchant!
The average credit card processing salesperson quotes a simple rate, transaction fee and monthly fee. He immediately tries to close the sale before the merchant has a chance to ask questions or compare quotes. The salesperson preys on the merchant’s lack of understanding and lack of education. Typically, the merchant does not know what questions to ask so he simply tries for a second quote from another processor. Then he tries to compare the two quotes, which can’t be compared because neither salesperson has represented the many other variables for the additional rate increases that have not been disclosed.
In realty, there are a multitude of variables to computing credit card processing rates and fees. The variables include:
1. What type of card is being presented for payment, i.e. debit, credit, rewards, or some kind of corporate card.
2. Whether the card is swiped, or keyed in from a telephone call or from the internet
3. The merchant’s type of industry. Restaurants, hotels, retail, B2B wholesale suppliers, government entities, healthcare, professional services, mail order, travel and entertainment, bars and catering, to name the bulk of the categories
4. The size of the ticket
5. Whether it is a prepaid card being presented or not

The variables are outlined in the interchange chart of rates and fees produced by the issuing bank associations results in about 1000 different rates and transaction fee variables. Therefore, for the processor salesperson to present one rate, transaction fee, and a monthly fee is perpetrating a scam! It tricks the merchant into thinking his question has been answered, and all he has to do is compare this rate to another quote. The simplicity of this kind of quote couldn’t be farther from the truth. There are increases in the rates for various types of transactions that are NOT DISCLOSED until the merchant discovers the discrepancies on his monthly merchant statement. By then, it is too late to question because most of the time, the merchant is stuck in a contract with hefty penalties for leaving. But we all know that Square and PayPal have a simple rate and transaction fee. Did you know that these quoted rates are super high to cover all wholesale costs and make sure there is a comfortable profit?

Do you want a simple high rate or low rates?

The only way an honest salesperson can present fair rates and fees is by analyzing your current statement and offer a side by side analysis comparison. Electronic Money Company, a merchant services sales office in business for 20 years, is the needle in the haystack when it comes to choosing honest people to work with for the life of your business. Click the “Get a Quote” button to find out if you have been overpaying your current merchant services processors!