‘No Hidden Fees’ Trap

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No Hidden Fees Trap

‘No Hidden Fees’ Merchant Scam

These days, everything we hear from politicians and advertisers has a SPIN. ‘No Hidden Fees’ sounds great, doesn’t it, especially when it is in bold type in a big font on a credit card processor’s marketing. Here is how this SPIN and the ‘No Hidden Fees’ Merchant Scam goes down.

Many processors pronounce to their prospects and put in writing their low rate for processing, let’s say, cost plus .29% and $.10 per transaction with ‘No Hidden Fees.’ To me, the reader, that means I only pay cost plus .29% and $.10. However, to the processor, it means no hidden fees besides the ones typed in small print with funny names on the application. The salesperson does not even mention these ‘Hidden Fees’ because he certainly does not want to bring attention to them and have to explain. By the time the merchant gets their first statement with more fees on it than the .29% and $.10 per transaction, the salesperson will be long gone, nowhere to be found, and the merchant is stuck in a contract with a $295 termination fee. The merchant just deals with it for three years until their contract is up and they start all over with another salesperson.

The whole fee structure of card processing is complicated and hard to understand, and the merchant simply does not know what questions to ask the salesperson in the first place. This report is an attempt to educate merchants so they can sift through the SPIN.

Here is a snapshot of the hidden fees I found on a competitor’s application that had a ‘No Hidden Fees’ claim in bold, big print on the cover sales letter that accompanied the application.

  • Customer Service Fee
  • Regulatory Fee
  • Online Portal Fee
  • Batch Fee
  • Early Termination Fee
  • PCI Monthly Fee
  • Non PCI Compliance
  • EMV Residence Fee
  • Non EMV Compliance Fee
  • Item Fee
  • AVS Fee
  • Voice per Authorization Fee
  • Chargeback Fee
  • Chargeback Research
  • Chargeback Reversal
  • Chargeback Arbitration
  • ACH Reject Fee
  • Terminal Encryption Fee
  • Liquidated Damages
  • $10/month
  • $4.95/month
  • $10/month
  • $.25/ transaction
  • $295
  • $19.95/month
  • $59.95/month
  • $.80/occurrence
  • $15/month
  • $.15/transaction
  • $.05/transaction
  • $2.00
  • $25
  • $15
  • $15
  • $60
  • $25
  • $25
  • TBD

If the salesperson does not point out these fees and explain them, but rather skips over this page to get the merchant’s signature on the last page, then the salesperson and the processor complete the scam.

Let me explain these particular fees to you. I call them ‘Pad the Profit’ fees. Now don’t get me wrong, the processor needs to make money for the service provided to the merchant. I sell processing and yes, I need to make money for my services as well.  But making a fair profit is a far cry from this particular processor’s rape and pillage. And I bet their service leaves much to be desired as well.

“My biggest gripe is the attempt to hide the fees and lying about them
with the ‘No Hidden Fees’ headline in their advertising.”

The Customer Service Fee is self-explanatory. It might be the only one.

A Regulatory Fee is a fee to collect from the merchant for doing what the IRS regulates the processor to do, provide a statement of how much processing the merchant did all year, and what they are reporting to the IRS.

An Online Portal Fee is a fee for the merchant to access their card processing data online. Many merchants also have a Statement Fee, which is similar in that it is a fee to print and mail a merchant statement.

A Batch Fee is a transaction-based fee for sending the batch of transactions processed at the end of the day. Usually a merchant has 30 batches, one for each day. Restaurants batch two or three times per day, once at the end of every shift.

An Early Termination Fee is a fee if you want to switch processors and leave their lousy service before the end of a typical three-year contract. Inside the 30 pages of Terms and Conditions, lies another termination fee called ‘Liquidated Damages.’ Liquidated damages means the processor will charge you all the fees it would have collected from you for the remaining term of your contract if you hadn’t left. This number could be quite huge! Many times these Terms and Conditions are not shown to the merchant.

Electronic Money Company emails the terms and conditions to all our merchants.
And NO, we do not have Liquidated Damages.

PCI Fees are service fees to cover the cost of helping you become PCI compliant. PCI stands for Payment Card Industry. PCI compliance was initiated to instruct merchant’s how to protect their systems from being hacked and credit card numbers getting into the wrong hands.

PCI Non-Compliance Fees are fees to slap your wrist if you do not file your required, annual survey asking you questions about whether you are set up to protect that card holder data.

I don’t know what an EMV Residence Fee is. I had never heard of this one before I saw this proposal.

A Non EMV Compliance Fee is an extra fee if you are processing cards with a terminal that does not accept chip cards.

An ACH Reject Fee is sort of an overdraft fee. If the merchant does not have enough funds in their bank account for the processor to pull their fees on the first of the month following the month of processing, then it is standard to charge a $25 ACH reject fee.

A Terminal Encryption Fee is a charge for downloading your file into your terminal.

Electronic Money Company does not complicate your life.

We keep it simple and explain everything to you in detail. We have our own technical support department in-house, in addition to our processor’s 24/7/365 support number. We don’t charge extra for our online portal. We keep it honest and fair, and our rates are lower than most. The value of service is exponentially high. We can guarantee this value and have merchants still processing with us since our beginning in the year 2000.

An Item Fee is another transaction fee. Notice how the quote included a transaction fee of $.10. The Item Fee is now an additional $.15 added on to the $.10, making the whole transaction fee $.25. Tell me how that is not a hidden fee!

An AVS Fee is an address verification fee. When you key in the credit card number on your terminal instead of swiping the card, there is added risk. Some processors add this extra transaction fee for these types of transactions.

A Voice per Authorization Fee is a charge for calling in the credit card number over a phone line. Perhaps your terminal is down and you need to get authorization on a card right away.  That is when you might incur this fee.

A Chargeback Fee is a charge for handling a chargeback. Almost all processors have this fee.

Chargeback Retrieval is a fee for doing the research on a chargeback before it becomes a chargeback. This fee is usually not charged if the chargeback really happens.

Chargeback Reversal is not charged by most processors. I guess if you win your chargeback, these guys want to collect another $15.

Chargeback Arbitration is a fee for arguing in your favor for a chargeback.  I would think you might want to do that yourself.

At Electronic Money Company, our purpose is to ease the confusion and pain of merchant services from the beginning through the life of a merchant’s business. We serve with honesty, integrity, transparency, respect and care.

We aim to be the best choice for merchant services, period!
Don’t you deserve the BEST? Get started NOW!
Call 505-296-2847!