Flagship Merchant Services Review
Last Updated: January 28th, 2014.
(Use the Above Links to Help Support Our Work)
I’ve had a complicated relationship with Flagship Merchant Services (aka, CardServ Inc.) in recent months. I go back and forth between hitting myself on the forehead with frustration and grinning with delight. They’re still hanging on and providing good bang for your buck, but I’m not completely satisfied with their services in 2013.
I like Flagship well enough overall. They take care of most of my essential concerns, with no setup fees and no early termination fees and a ton of other great discounts. They’ll also waive your Authorize.Net gateway setup fees (usually about $100), which is really nice for ecommerce businesses along with their free shopping cart setup. A free mobile swiper and app could also come in handy. You can definitely find good value with Flagship’s value-added services. Unfortunately I’m not entirely convinced that their basic (and essential) processing services live up to this value.
When visiting the Flagship homepage, you’ll be impressed to see that they were rated the number one merchant account provider in the industry for seven straight years by Top Ten Reviews. That’s a pretty big deal, you might think. While I certainly see it as a commendable achievement, I can also tell you that Top Ten doesn’t take many important factors into consideration. For instance, they completely ignore the $99 annual PCI compliance fee charged by Flagship, as well as the $20 monthly non-compliance fee. They also ignore important considerations like customer satisfaction and sales/advertising transparency. Interchange-plus pricing? I don’t think that Top Ten even knows what that is.
Still, all said and done, Flagship makes the grade as a 4-star provider at the moment. I love that they have no early termination fee, and that they do their best to add value to your processing account. They’re doing better than average.
To raise their rating, Flagship could:
- Publically and personally address more complaints, including those in our comments section
- Disclose commonly misunderstood fees more clearly during sales consultations, as well as on their website
- Advertise an interchange-plus option, and provide information about this transparency-enhancing pricing model
- Keep better tabs on inactive accounts, and follow up with non-seasonal merchants when they have not been processing for extended periods of time
- Make the cancellation process simpler, more reliable, and easier to track
- Include PCI compliance fees as part of the advertised monthly cost, and actively work (or work harder) to ensure merchants avoid PCI non-compliance fees
- Stop advertising deceptively low rates (“Rates start at 0.38% + $0.19”)
Check out the full review below for more details.
Products and Services:
Flagship Merchant Services offers a pretty limited number of products and service, which is actually a good sign in my mind. I like to see a provider add value to your account without trying to shove the kitchen sink down your throat. While I’m not particularly impressed here – and I had a hard time locating much useful information – they offer everything you’d need to get started. Offerings include:
- Merchant accounts: Flagship Merchant Services is not a direct processor. They use a third-party for processing services. These seem to come mostly through iPayment, but have also come through First Data in the past.
- Gateway/virtual terminal: Gateways come from Authorize.Net, with no set up fee. This could save you about $100 in some cases.
- Mobile processing: Offered through iPayment’s MobilePay. They’ll even hook you up with a free swiper.
- Terminal sales
- Online reporting
- Simple checkout
- Shopping cart setup
Fees and Rates:
While they may set you up with interchange-plus pricing if you ask for it, by default they’ll set you up with a tiered system. Other fees include:
- PCI compliance fee: $99 annually
- PCI non-compliance fee: Additional $20 monthly
- Statement fee: $7.95
- Gateway fee: $8-10
- Their monthly minimum varies and is negotiable, but it seems like the industry standard $25 monthly minimum is used most commonly. Please note that your other fees do not count toward your monthly minimum – only your processing fees do.
So if you do not process any transactions on a given month, you will be responsible for about $33 in fees, not including PCI compliance fees. If we prorate the PCI compliance fee and include it (as we should), then your baseline monthly payment for a retail account, just for having the service (even if you don't use it) is about $42 per month minimum. That’s pretty steep when you compare it to Dharma Merchant Services, who charges only $15 as a baseline monthly payment for retail. CDGcommerce charges only $10 per month in baseline fees for a retail account.
For low-volume or sporadic processing, this makes a huge difference. But if you’re processing enough to exceed your monthly minimum every month, then it won’t make any difference to your bottom line whatsoever.
Contract Length and Early Termination Fee:
Flagship Merchant Services has no early termination fee, making your account with them a month-to-month agreement (which is awesome). Make sure to cancel your account as per the instructions in your contract, though, or else they’ll continue taking monthly fees from your bank account.
You should note that some merchant have reported difficulty closing their accounts, a problem that Flagship blames the processor for. The good news is that if this occurs and you are charged monthly fees when your account should have already been cancelled, Flagship will generally reimburse you that fee.
Sales and Advertising Transparency:
Flagship makes very few fee disclosures on their website, offering visitors little initial guidance or education material. I was disappointed to see them using the oldest deceptive gimmick in the book, quoting the lowest possible rate as a representation of their fees. It is, in fact, one of the only hard numbers that Flagship provides:
Rates start at 0.38% + $0.19 per transaction with Free Account Set up!
They don’t even offer a footnote explaining that this rate will only apply to some debit transaction, nor do they go on to explain how rates are decided anywhere on the Flagship site. I would rather they didn’t provide any rate quote than a single deceptively low number that is likely to cause at least some confusion.
Furthermore, although they advertise their credit card terminals with some vigor, Flagship fails to disclose any pricing information. While most providers don’t disclose any pricing information, the best ones do (Merchant Warehouse and Dharma Merchant Service, to name a couple).
While I’m thrilled to see that Flagship Merchant Services uses an in-house sales team for most of their accounts, but that fact makes many merchant complaints I’ve read even more disappointing. Independent sales reps are known for unregulated activities and overall poor training. When in-house reps are failing to make important disclosure – that is a bit worrisome.
While I don’t have evidence that this problem is systemic at Flagship, you should proceed with some caution (as always).
Customer Service and Technical Support:
While Flagship Merchant Services advertises 24/7 customer support (thumbs up), many merchants have reported a lack of overall quality. During business hours you are likely to get in touch with an in-house representative to help you (which is ideal!), but outside of regular business hours you may see a decline in the quality of service.
I really love that Flagship makes the person who sold you their services your continuing point of contact as a dedicated account manager. Unfortunately, this means that if you get an unresponsive account rep, you could be in for a bumpy ride. While I have every reason to believe that most Flagship reps do a great job, it’s obvious to me that some are missing the mark. If this happens, I’d encourage you to escalate the matter to his or her manager, and even ask to have your account transferred to a different representative if you simply can’t make it work. At the end of the day, Flagship wants you to be happy. Sometimes you just need to be aggressive to make that happen.
One merchant on the BBB review page says that:
Although customer service was great the billing was not, nor was the contract discussed in full.
Another puts it more bluntly:
They are helpful at first but when you don’t receive the funds in your account it’s like talking to a brick wall.
And this one more colorfully:
The customer service department was like a box of chocolates….you never know what you’re gonna get.
Furthermore, the Flagship FAQ leaves a lot to be desired, and it’s the only self-service customer support available.
Negative Reviews and Complaints:
Flagship’s internet reputation had a rough year in 2013. You can currently find 40 complaints on RipoffReports, as well as almost 60 complaints in our own comments section. They have an unfavorable C+ rating with the BBB, with 92 complaints in the past three years. 54 of those complaints came in over the past 12 months, demonstrating a rapid rise in complaint volume. In addition to the 92 complaints, Flagship has been reviewed 31 times on the BBB, with 28 of those being negative, three neutral, and zero positive. You can find an additional 42 complaints on ConsumerAffairs.com.
Some of the most common complaints with Flagship Merchant Services include:
- Non-disclosure of important contract terms: For instance, a number of merchants complained that they filled out an the application and signed the Merchant Agreement believing that it was part of the application process and not actually signing up for service to begin. Many merchants also complain that various fees (such as monthly minimums).
One commenter says:
After signing an application online, my next email was with instructions on how to reprogram the terminal. I’m like, wait a minute, where’s the MPA?? They forwarded me a copy of the agreement, which had my digital signature placed on pages I’d never seen. Seems to be in order, but I’m not happy about that. How hard is it for me to review each page online and place the signature myself? We’ll see when I get the first statement.
- PCI non-compliance fee: While I don’t really like to see this fee at all, especially when you’re already paying a PCI compliance fee of $99 with Flagship – the fee itself is not my problem here. The problem is that account representatives fail to clearly disclose this fee in many cases. The cost is an additional $19.95 per month for non-compliance.
- Difficulty cancelling service: This comes up over and over and over again, so I know something is up over there. Having no early termination fee starts to lose its meaning when you’re paying $50+ per month for a service you’re not using and that you wanted to get rid of.
To quote one reviewer on the BBB site:
Oh, what anguish to get my account cancelled. 3 times! I sent a written statement to the company to cancel our account with them and they do nothing. Don't respond to my emails or phone calls just continue to charge me the minimum amount every month which was like $75 this past month. I hope to get this resolved soon but it looks pretty bleak.
- Poor customer service after signing: Having your salesperson as a continuing point of contact can make for an overall excellent support experience. Unfortunately, this is not always the case. When your account representative becomes unresponsive, it can be a nightmare.
- Billing issues: In these instances, Flagships points the finger at their processor iPayment (and perhaps rightfully so). After all, these mistakes often do come directly from the processor. In my opinion, though, Flagship had ought to provide intensive arbitration and mediation on the merchant’s behalf. This includes account holds/freezes, which you can do your part to avoid by reading this article.
The good news here: Flagship is generally willing to provide at least partial refunds and make things right.
Positive Reviews and Testimonials:
You can find a couple of merchant testimonials on the Flagship homepage, as well as a small list of logos for companies they provide services for.
The most substantial recommendation for Flagship Merchant Services comes from the popular review site Top Ten Reviews, which reviews everything from consumer products to career choices. While Top Ten may honestly and unbiasedly believe that Flagship is the best merchant account provider out there, I have to firmly disagree with them.
Unlike Top Ten Reviews, we only review merchant services and software here. It seems to me that Top Ten misses some very important aspects of the review process. They completely ignore the $99 annual PCI compliance fee charged by Flagship, as well as the $20 monthly non-compliance fee. They also ignore important considerations like customer satisfaction and sales/advertising transparency. Interchange-plus pricing doesn’t seem to be a phrase in their vocabulary. To be frank, I think that the merchant account reviews from Top Ten are driven by arbitrary data and superficial appearances. So while Flagship has indeed won their top spot seven years running, I question the meaningfulness of this award – and so should you.
There’s a lot to love about Flagship, to be sure. They generally provide good value, deal with almost all sales in-house as far as I know, and let you leave at any time without penalty (in theory). I love the freebies they offer, even if they’re presented in a gimmicky way. Unfortunately, it’s not all good news.
Without a doubt, some complaints that come in under the Flagship name are actually criticisms of their processors, namely iPayment. In my mind, however, it’s Flagship’s responsibility to provide excellent arbitration, mediation, and prevention when it comes to processing issue. It seems like they fall short here in many cases. Their advertising transparency needs work, and their online reputation isn’t fairing well. Flagship has to make some serious changes – more than the facelift they gave their homepage recently – to keep up in this industry.
They get 4 out of 5 stars for the moment. They perform better than the industry standard, but I don’t know how much longer this will be true. More and more providers are dropping their early termination fees and disclosing incidental fees more clearly. I’m still comfortable recommending Flagship to you, but you should proceed with some level of caution. I’m hoping to revisit this review with good news in 2014. Time will tell…