For many business owners, setting up bank merchant services for the first time can be a huge hassle. A lot of times people go straight to the local bank because they think they will give them the best deal. But is that really true? Do banks offer the lowest rates and best customer service? Let’s look at a few of the things that your local bank might be keeping hidden in the fine print.
You might assume that you would be eligible for lower fees on a merchant account if you have all your other accounts with the same bank. Remember that a bank is a business just like any retail store, and they have to pay for this service just like you do. Most banks don’t use their own merchant service company, but use a third party processor instead. Since they use this third party processor, they have to charge more in fees so they can make profit on the account. Oftentimes, banks add in extra hidden fees to make up the difference. One fee to look out for is the dreaded annual fee. Your bank won’t tell you about this up front most likely, but when your one year anniversary hits you watch $100 extra disappear from your account. Many local banks also like to add a set-up fee. You shouldn’t have to pay anything before you run even your first transaction. Many banks will claim that the merchant account is provided directly through them, but that is almost never true. Many tellers and bank managers simply don’t know the truth themselves, and can lead you astray through no dishonesty on their part.
Contract: The most dreaded word in the merchant services industry. It’s very important to read the fine print when you look at signing up for merchant services through your bank. Your bank may tell you that they don’t have a contract, but again, it’s not the local bank that makes that decision. The particular merchant processing company they have chosen to contract through oftentimes makes this decision. Many banks will charge a $300 to $500 cancellation fee on a three-year contract term. Our advice is, “Don’t ever sign a long-term contract!” If they won’t let you go month-to-month, please go and find another provider. A bank or a merchant services company should not have to lock you in for a 3-4 year auto-renewing contract just to keep your business. Find a processor who wants to work to keep your business with excellent rates and customer service.
As we stated above, a third party is almost always used for bank merchant services. So, who gets your phone call if you have a problem? Usually, this has nothing to do with your local bank. Typically you want to call whatever bank merchant services company they have contracted through. A region of banks may have a service rep, but that service rep still has to deal with the contracted bank merchant service company. Do you have a broken terminal and need another one right away? Need something fixed so you can keep accepting credit card payments for your business? The help you need may not be available on the weekend and usually will schedule a visit 3 to 4 business days in the future.
Banks can be great for many things, but bank merchant services isn’t one of them. Be sure when you choose who you will use to accept credit cards at your business, you think twice before going straight to your local bank branch. Besides, even if you decide to use your local bank as your merchant processor, in the best case scenario you’ll still have to pay to process credit cards. There isn’t a bank we’ve encountered who can offer the ability to process credit cards for free.