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Merchant Account Reviews

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  • Fattmerchant Review

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    Pros Transparent cost-plus pricing 0% markup rate with subscription Next-day funding Free high-quality invoicing included Free analytics dashboard and tools No early termination fee Integrates with QuickBooks Cons US-based merchants only Best value for mid-volume or higher Overview I love a cute cartoon piglet as much as anyone, but I refuse to be manipulated by […]

  • CDGcommerce Review

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    Pros Interchange-plus pricing offered Free payment gateway and virtual terminal No account setup or application fees Month-to-month billing with no early termination fees Excellent customer service and support Cons Mobile card reader is not EMV-compatible Only available to US-based merchants Overview CDGcommerce is a merchant account provider headquartered in Chesapeake, Virginia. Founded in 1998, the […]

  • Helcim Review

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    Pros Exclusive interchange-plus processing rates No long-term contracts or early termination fees Extensive account fee disclosures Minimal monthly account fees Excellent customer support Cons Not cost-effective for merchants processing less than $1,500 per month No EMV-compliant mobile card reader Overview Helcim is a merchant account provider headquartered in Calgary, Alberta. The company also has an […]

  • Dharma Merchant Services Review

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    Highlights: Outstanding sales transparency and highly ethical business practices Discounted pricing for qualified non-profit companies Interchange-plus pricing offered exclusively No account setup fee No monthly minimum No annual fees Month-to-month billing with no early termination fees Excellent customer support Recommended for businesses processing at least $10,000 per month Overview: Dharma Merchant Services is a merchant […]

  • Payline Data Review

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    Pros Fair pricing with easy-to-understand contracts and no hidden fees Excellent customer service, including phone and email support Integrates with Apple Pay and other mobile wallet services Month-to-month contracts with no early termination fees Cons Currently only available in the United States Overview Payline Data is a merchant account provider headquartered in Chicago, Illinois. A […]

  • Payment Depot Review

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    Pros Subscription-based pricing offers very low per-transaction processing costs Month-to-month billing with no long-term contracts or early termination fees Offers a substantial discount for annual rather than monthly billing Cons Only available in the US Not cost-effective for very small businesses Overview Payment Depot is a merchant account provider headquartered in Orange, California. The company […]

  • Durango Merchant Services Review

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    Overview: Usually, when I see a provider advertising a specialization in “high-risk” accounts, it sends up a red flag for me. Many such providers cling to the shady underbelly of the merchant market, alongside their clients who often traffic in pyramid schemes, snake oil, rigged gambling and prostitution, among other unsavory and unfair business endeavors […]

  • Host Merchant Services Review

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    Pros Transparent cost-plus pricing Month-to-month agreement No setup or application fees No monthly minimums Spotless track record Good customer support Good website & advertising Cons Expensive for low-volume merchants Overview: Host Merchant Services is abbreviated HMS, so my brain automatically fills in “Pinafore” afterward every time I see it. If I’ve already lost you (or you’re […]

  • Beanstream Internet Commerce Review

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    Overview: In fall of 2015 Beanstream was acquired by Bambora, a Swedish payments company. While it’s still too soon to say what the long-term impact of this acquisition will be, so far things are going well! Canadian merchant accounts have historically not been very competitive with US-based accounts. While the current industry trends seem to […]

  • Braintree Payment Solutions Review

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    Pros Predictable flat-rate pricing Excellent developer tools Extensive integrations available Excellent customer support Comprehensive payment type support Multi-currency options Excellent marketplace tools Excellent subscription tools Cons Not suitable for high-risk industries Long setup times for accounts Overview Is it a brain in the shape of a tree, or a tree that grows brains? I’m not […]

What is a Merchant Account?

If you want to accept card payments from your customers – and virtually every business needs to these days to remain competitive – you need access to a merchant account. “Merchant” is another word for a seller or business owner. You can think of a merchant account as a bank account that extends you, the merchant, a line of credit. This allows a merchant to receive funding for the credit transaction based on the trust that they will perform the services or deliver the goods properly, and thus the customer will not refuse to pay for the transaction based on the inadequacy of the merchant.

The point of a merchant account is to facilitate the complex interactions that need to occur between you, your customer, the credit card networks, and your payment processor every time you receive a card payment. It helps to ensure that you receive funding as quickly as possible, that the banks are protected from losses, and that buyers are protected from ripoffs and scams. With a merchant account, everyone is held accountable based on the rules of the credit card processing agreement.

You will, of course, have to pay a number of fees in order to take advantage of the credit card processing networks and banks. But it’s much easier and more secure to open a merchant account than it is to keep a book of credit accounts for all of your customers!

How to Avoid Merchant Account Scams and Ripoffs

Be skeptical of sales gimmicks – If it sounds too good to be true, it probably is. A lot of processors make claims about having the lowest rates in the industry, but how can they all have the lowest? Answer: they can’t. They will match the rate quote provided by another processor, but the contract could still include hidden fees to make up for it. When a processor claims that it will pay you $1000 if it can’t beat a competitor’s quote, rest assured it has no intention of paying up. There’s always a loophole.

Request interchange-plus pricing – The only way to make real, meaningful comparisons between rate quotes is to get an interchange-plus rate. This type of quote will tell you the markup that you are paying on top of the wholesale (or “interchange”) cost of the transactions. Since the wholesale cost will vary from transaction to transaction, this is the only way to get a clear picture of the profit margin for the processing company. Fixed rate tiered quotes that do not separate wholesale from markup reduce transparency and make it impossible to compare the rates effectively from one company to the next.

Avoid early termination fees – The most common merchant account fee that we see complaints about is the early termination fee (ETF). These fees can range from hundreds to thousands of dollars, and are often not disclosed or poorly disclosed during the sales and contract signing process. Don’t take your salesperson’s word for it, either. Verbal promises during the sale process are not legally binding. If it’s not in writing, it’s worthless. You need to review your contract carefully and make sure an early termination fee waiver is included if the contract mentions an early termination fee.

Don’t give in to pressure – Some merchant account sales agents will try to put pressure on you to make a quick decision, saying that an offer is only good for a certain amount of time. Never let these high-pressure sales tactics sway you. You, the business owner, have all the power. Don’t make any hasty decisions. Sales agents may also try to make you feel like you owe them something just because they have spent time on you. You don’t owe the sales agent anything! Don’t let them guilt you into making a decision that could negatively impact your business for years to come just so they can close a sale.

What Is a Payment Gateway?

A payment gateway provides the connection between an online payment and the bank that processes any given credit card transaction. Whether used for eCommerce or a mobile payment application, the payment gateway works behind the scenes to securely transfer sensitive credit card information. It’s important to recognize that a gateway is not the same thing as merchant account, and each comes with its own separate fees.

Most eCommerce businesses will need a payment gateway, but some in-person businesses might need one too. Point of sale (POS) software will sometimes require a payment gateway to operate. If you just need a virtual terminal to key-in card information at your computer, however, you might not need a dedicated gateway at all. Many payment processors include a virtual terminal for free as part of their basic service packages.

To use a payment gateway, you will have to “integrate” it with your website or software. This can be as easy as typing in a numerical key. It can also be difficult enough that you will have to hire a web developer to help out. It all depends on your gateway, your software, and your needs. Your gateway provider’s website should include detailed instructions regarding integration.

When picking a payment gateway, it’s important to make sure that it’s compatible with your POS, your shopping cart, or your payment processor. Not all gateways work with all systems. Be sure to talk to customer service before you commit to any solution to avoid fees and penalties for cancelling.