If you that something seems too good to be true, then it probably is.
I cannot tell you how many times I work with someone who was lured away from their current service provider with a promise of something better.
Here is just one example of how bad it can get.
Case study – Before
Business paying $925 in merchant fees a month, owned their equipment and did not surcharge their clients.
Case study – After
Business moved to a credit card processor who offered them $44 per month with an equipment upgrade, no money up front.
Sounds like a great deal, right?
Sure; however, they are now leasing their equipment at a rate of $195 per month for 4 years. This is nearly $9,500 over the life of the contract, and unfortunately, the only benefit of the new equipment is that it is compatible with the new merchant provider. It doesn’t do anything more than their old system did for them.
It doesn’t connect to QuickBooks (our systems do.)
It doesn’t track their inventory (many of our POS systems have this feature.)
It didn’t actually need to be replaced (we never recommend replacing hardware that you already own if it is PCI compliance and does what you need it to do for your business.)
It gets worse.
Then, the service provider recommended that they pay for this new equipment by surcharging their clients 3% on the transactions.
So, that was bad advice.
1. Their rate is less than 3% – so the business is now charging more than they are paying – which is illegal.
2. The business was not able to set up any differentiators by payment type and were blanket surcharging every transaction, including debit cards, which is (also) illegal.
3. The quote language was confusing, so the $44 per month fee was actually on every $500 in sales. (The business’ sales are pretty high.)
4. The term is for the entire 4 years and they can’t buy out of the contract.
Now, the business is paying over $1,500 in fees per month, has violated the PCI Compliance standards and is not getting any more service from their new equipment than they were before; which means that the upgrade provided no actual benefit.
Here’s the worst part.
In the 4 years of this new agreement the business will spend over $40,000 more – MORE – in fees and equipment leasing than they would have had they shopped around and asked more questions before they made a change.
Please, trust your gut. If it seems too good to be true – research some more. Ask more questions. Reach out to me or my staff and get a second or a third opinion.
With TransAct it is always just a 20-minute conversation to learn more and in less than a half hour, we could have a very simple conversation that could very well save you a lot (a lot) of money. Another thing that is true? It doesn’t hurt to wait and find the right solution for your business; especially one that will tie you into a contract for four years.
~ Mary Ann