How to Choose the Best Merchant Services Provider

Question of the Day: What's going to be my "rate"? Don't get drawn into the "rate". You should be worried about how much money is actually coming out of your account at the end of the month. This is the sum of every discount rate, downgrade surcharge, transaction fee and monthly fee you will be paying. Usually the rates quoted publicly in advertisements are just one of the rates you will be charged. Mail order and eCommerce merchants need to be wary of rates being quoted below 2%. To stay in business, retail merchants need to be wary of rates quoted less than 1.60%, because these rates are below interchange operating cost.

Review the Entire Fee Schedule.

Make sure to review the entire fee schedule. Ask about all of the transaction fees, authorization fees, monthly fees, setup fees and programming fees. There should not be a setup fee associated with setting up your account. If your processor-to-be is trying to charge you a setup fee or application fee, move on! It is perfectly legitimate for you to request a rate review in the middle of the contract period if your volume significantly exceeds the volume from the time which you signed the agreement. Just like in any industry, the more volume you do, the better rates you can negotiate. So go on! Make money, and be rewarded by paying less.

How long will it take for your deposit to be available in your bank account after batching out?

This is a very important question. You have suppliers and vendors that need to be paid. Their concern is not when you will have funds deposited. They, just like you, need to get paid sooner rather than later. Most of the processors make money in the same way as your bank - by floating your money. The average deposit time for Visa, MasterCard and Discover transactions in the industry is 48-72 hours. An average deposit time to receive American Express deposits is an even longer 3-5 business days. There are a handful of processors that provide next day funding. Some banks provide next day funding but charge you a fee or mandate that your checking account is housed with them as well. Some merchant services providers don't care about where you bank and deposit you the funds quickly at no additional fee.

BAMS, the company which I run, provides 12 hour deposits. As long as your batch is settled before 7pm EST with BAMS, the funds are always available in your bank account the following morning at 7am.

Locked In Rates

Once you've negotiated a deal that benefits your business, it is important to be ensure that your rates will not change. You don't want an adjustable mortgage fiasco. You are making a commitment to stay with the processor, so the processor must make a commitment to you to not raise your rates. Make sure the discount rates and transaction fees are set in contract and not subject to change at any time throughout the life of the agreement. Only increases by the Associations are admitted to be valid reasons to increase the rates from the Merchant Processing Agreement. A reputable provider will pass through the increases directly, without attaching their own fee on top. A basis points system tacked on as an increase can cost your business thousands a year if the processing volume is significant.

What is my termination fee if I decide to switch providers or close my business?

If you don't ask this big question before you sign the agreement, you'll be disappointed when you find out the answer later. The ideal goal is to have a termination fee as a specific dollar amount. Many companies are using the deceptive practice of guaranteeing themselves profit regardless if you're using their service or if you've switched. For example, you may sign a 3 year agreement and see yourself switching to another merchant services provider 1 year down the line. You might be penalized the remaining 2 years of profit and made to pay over two thousand dollars ($2,000). A standard termination fee is between $350-$499, as a one time flat fee.

Online Reporting and Customer Service

On a scale of importance integrated online reporting maybe number one number six to you. Technology is the future of credit card processing and online payments. You want to deal with a company that is motivated and on the innovative forefront to provide you transactional data insight. If you can't monitor your sales in detail, you can't predict them or set goals. A transaction tracking tool should be readily available at no cost, for updating you about deposits, statements and chargebacks.

A merchant services company with their customer in mind always looks out for their best interest. Along with an online portal you should double check that 24/7 support is available in case your credit card terminal or online payment gateway goes down. When there is a problem, it is crucial to know that you won't be left in the dark.

Resource box: Bank Associates Merchant Services provides eCommerce processing and online merchant accounts. Enable your business to accept payments through a variety of payment gateways and online payment services. If you are looking for quality, reliability and technological support, BAMS is the right credit card processing services provider for your business.


My name is Drew Goldbaum and I am the Director of Operations for Bank Associates Merchant Services. BAMS is an ever-growing merchant services provider with extensive experience in the credit card processing industry. Our corporate headquarters is based in the business center of the world – New York City – allowing us to stay one step ahead of our competitors by offering the most up-to-the-minute electronic payment solutions. We can s...

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