April 4th, 2007 by Jamie Estep

if (Advertised merchant account rate < 1.7%) : Run Away

I have been doing some research lately on some upcoming posts here on the blog, and more and more I am coming across companies marketing with extremely low processing rates. Yesterday I was emailed a website by a colleague that was advertising 1.11% and only $.11 per transaction.

Now, credit card interchange is about 1.7% when both Visa and MasterCard are taken into account. When businesses offer 1.39% or generally anything lower than about 1.7%, they are advertising a signature debit rate. While this rate is probably valid for debit transactions, it is not valid for credit transactions.

After looking into the businesses advertising with these rates, I found retail rates for credit cards above 2%, transaction fees above $.30, monthly fees above $20 in addition to $25 and higher monthly minimums, and $10+ statement fees.

My conclusion with businesses that advertise like this, is that if they are this deceptive up front, they are even more deceptive when you look at the fine print. This may not be the case every time, but honestly, if a company blatantly, deceptively, advertises a cost, and what you actually pay is 30% more, they are not someone good to do business with.

My advice for new business owners, or persons looking for a new merchant account. Find a company that is at the very least up-front with you about their rates. If they are advertising well below interchange, they are going to make up the money somewhere else. It is far better to pay the same amount, and know what the money is actually going towards, than not knowing what the extra cost is from.

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