A good question many business owners we network with ask is when businesses should change merchant services providers. In the long run, hopefully you don’t have to change…if you have chosen the right provider from the beginning.
That said, it is important to change when it makes sense for your business, as it grows, evolves, or your needs simply change.
Some things to look for as contracts renew (we never require a contract) and to consider it is time to make a change:
- Flat rate
- Full service
- Free equipment
- Processing tied to a bank loan
These first two go together even though they are opposite ends of the spectrum.
Flat Rate vs. Full Service Merchant Services
If a business started with a flat rate merchant services program, it is good practice to review the sales and costs versus a variable rate provider—which covers most full service merchant services companies—every 3 to 6 months.
Flat fee merchant services are usually better suited for start-up companies, owners who know they will process under a certain amount of revenue each month, have a very small number of low-value transactions, or need a lower level of training and support.
What should always be a part of the review is PCI compliance, fees that may be charged on top of the flat rate processing, how much training is available to get started, and the level of support for unforeseen circumstances like help fighting chargebacks.
Flat rate credit card processing can often be budget-friendly, but once a business reaches around $10,000 to $15,000 a month, it may be a good idea to consider comparing your processing history with a full service payment provider who offers more options.
Is Free Payment Processing Equipment Free?
Sorry to say, but many providers will offer free payment processing equipment to get a business started with no up front costs. But, unless all you need is a smartphone, tablet or computer you already own, any equipment given to you up front is never (truly) free, it is just built into another aspect of charges assessed.
My Bank Requires Payment Processing Because of My Loan
This is often told to business owners. It isn’t 100% accurate. While a bank often will offer a discount on a business loan if a business processes credit cards with them too, this is usually made up somewhere and it can easily be recaptured in merchant services. Whether it is total revenue or assessed in bank charges, the costs are still costs to a bank. Their core business is making money on money changing hands.
It is best to keep everything compared without mixing different types of services to be able to make an accurate assessment of the total costs of what you need.
It may be a good time to re-evaluate your business needs.
Changing merchant services providers does not have to be complicated or difficult. We offer a one on one consultation for all potential clients and we like to be a good fit for our clients. We offer an unbiased opinion and we have told business owners when we are not better suited for them and their business than their current provider. We don’t even need a current statement to tell you this information.