We all frequently read about various types of scams to look out for, warnings of Packet Sniffing, and stolen card numbers. The real scams to look for are the ones that are directly on your merchant account application. Merchant Account Fees seem to suddenly pop up after you have signed your agreement.
One of the most interesting scams that has come up frequently is related to hidden merchant account fees. This scam entices merchants to apply for accounts at low rates with a brief quote. They conceal fees, rates, and many various extra charges. When applying for a merchant account, is important to stay away from advertisements that claim to have the lowest rates around. Some key fees to ask for are: discount rates, mid qualified rates (keyed rates), non qualified rates (rewards card and purchase card rates), transaction fees, setup fees, annual fees, statement fees, services fees, PCI Compliance fees, merchant club fees, and early termination fees.
Many times, merchants will receive a lengthy terms and conditions document. There are usually many different fees within the fine print of this document. You should request the terms and conditions document in advance and make sure to read through it carefully. You don’t want to be caught with a lot of unexplained and unexpected expenses.
Also beware of the “Hold Back” or reserve account. Some scams prey on e-commerce merchants looking for the lowest rate. Once the merchant finds the rate they are looking for, they fill out a surprisingly short online application. A high reserve is requested in order to grab the maximum amount of money without arousing the merchant’s suspicion. All of the sudden the merchant account provider disappears, the telephone number is disconnected, and your money is gone. It is important to find out what bank your card processor is registered through, and who will actually be responsible for your money if they should happen to disappear.