First Data Review
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- Date Established
- Atlanta, GA
First Data (FD) is the 800 lb. gorilla of the credit card processing industry. They were established in 1969, and according to their stats they serve over six million merchant locations worldwide. That is a HUGE merchant base, about six times bigger than the already-enormous Chase Paymentech. First Data has many offices across the globe, but their U.S. headquarters is in Atlanta, GA. They also have an independent sales wing that is headquartered in Calabasas, CA.
I’m going to focus this review solely on First Data’s direct sales channel. As you may know, there are MANY resellers (called ISOs/Agents) of First Data that either contract FD for their processing platform, or act as referral partners for all of FD’s services. Some of those resellers are going to be ethical, and others are not.
If you are a small business and you want the power of First Data merchant services without getting ripped off by a fly-by-night sales agent, and you don’t feel like negotiating with First Data, please do yourself a favor and check out Dharma Merchant Services. They use First Data as their processor, but they do so ethically and reliably. Plus their pricing model is incredibly predictable and a better value than you’re likely to get elsewhere. So before you sign on with a First Data rep, at least consider that alternative.
FD has their own in-house sales team, and they can sign you up directly. No need to go through a middle-man, unless that middle-man is going to offer you something above and beyond what FD can give you. Superior customer support or training would be one example. A reseller that adds value is appropriately called a Value-Added Reseller (VAR).
Let me give you a quick rundown of the good and bad about First Data:
First Data is at the top of the food chain. They handle everything in-house, which means that if you sign up directly with First Data, then you deal exclusively with First Data. No middlemen.
They’re at the bleeding edge when it comes to payments technology. They offer a ton of resources, tools and complementary services for their merchants. This includes tools that help with PCI compliance, transaction data & analytics, fraud prevention, chargeback dispute resolution – the list goes on and on. And they just recently partnered with Google Wallet to provide business owners the ability to accept mobile payments. When it comes to add-on services, First Data wins, hands down! Of course, all those extra services don’t come cheap…
By default, First Data’s fees are pretty high, probably because they offer so many extras to their customers. All of that technology comes at a cost, so I’m sure they need to recoup some of that expense from their merchant base. They also have an early termination fee that is pretty hefty. Finally, they are known for using enhanced billback as a billing method, which is not good at all.
All of the above rate and term issues can be fixed pretty easily if you know what rates and fees to ask for. If you don’t, then you can contact us, and we’ll help you through the process.
First Data also has a tendency to hold funds or shut accounts down at the drop of a hat. I’m sure the simple thought of having your account shut down or funds withheld is enough to make you shiver, so the best thing you can do is educate yourself on how to prevent it from happening. If you read this article, you should be A-OK!
In conclusion, First Data is a good company. I think they’d be a decent solution for a higher volume business that needs all the bells and whistles. Unless you smaller guys can get signed up with awesome rates, then a First Data account may be a bit too rich for your blood. I’m giving First Data a 4 out of 5 for now.
Don’t forget to read through the rest of this review for more info on First Data, or jump to our comparison chart for more info on our best-rated providers! Jump over to Dharma Merchant Services if you want to deal with a reputable First Data reseller.
Products and Services:
Rather than ask what First Data offers, perhaps we should ask what they don’t offer. It would be a very short list. If you can name it, chance are First Data supplies it – and in-house and top of the line of course! If you have complex needs and want simple, one-stop solutions, FD can take care of you in a unique way with their wide array of products and services, all backed by this incredibly stable and successful company. Their offering include (but are not limited to):
- Merchant accounts
- Gateway/virtual terminal
- Online reporting
- Terminal sales/leases: Before you decide to, take a look at this article.
- Check processing: This allows you to scan and deposit checks right at the register. You can also run it against a national registry of bad check writer for added security.
- Mobile processing: Basically everyone is offering this these days, and First Data is no exception.
- POS software: First Data has integrated POS solutions for multiple industries.
- End-to-end encryption: For optimal data security, end-to-end encryption helps to eliminate any holes.
- Industry-specific solutions: including transportation solutions, corporate billers, consumer marketing, integrated partner, education, government, and financial analyst solutions.
- Marketing/loyalty/gift card programs
- Services for financial institutions
Trying to summarize these offering here doesn’t even come close to doing justice to the complex solutions and services you’ll find at First Data. Check them out here.
Clover Station, Clover Mini, and Clover Mobile POS:
For point-of-sale needs, First Data pushes its Clover Station POS products first and foremost. This includes its Clover POS software, Clover Mini, Clover Station, Clover Mobile, various accessories, and a growing app marketplace where users can add free or paid apps to upgrade features.
The suite of hardware and software is proprietary, which means that you must use the company’s products to operate. I don’t particularly like this. One big selling point for tablet POS software is versatility. With a standard iPad POS, it’s very easy to switch software at little cost because all of the hardware works with a huge variety of systems and integrations. With Clover POS, you are stuck using the Clover hardware with the Clover software. If you want to switch, you have to do a complete overhaul. In fact you can’t even test the Clover Station without having First Data’s proprietary hardware! Again, this is a major advantage of other tablet-based POS system. Usually you can test them out on any old tablet, which makes it easy to see what works for you without any commitment or hassle.
This is not to say that Clover POS sucks. I haven’t had a chance to test out the front-end software or hardware, but based on the back-end software and the feature list, it seems like an interesting and capable product suite. (Time will tell based on early adopter experiences.) I just think that you might be able to find a better (and potentially less expensive) tablet-based POS system for your individual needs by browsing more versatile and varied iPad POS systems. For more information on iPad POS, check out this article.
Note that Bank of America Merchant Services is also selling the Clover POS station.
How Much Does Clover POS Cost?
The Clover website does not disclose any pricing information. Instead it directs you to resellers who are free to set their own prices or provide bundles. Based on my research, this seems to be the average price information:
- Clover Station POS: $1000 (includes receipt printer and cash drawer)
- Clover Mini POS: $500 (includes built-in receipt printer)
- Clover Mobile POS: $500 (no printer included)
These are just the hardware costs. Additional fees will apply. Expect between $25 and $50 per Clover register, as well as standard processing fees.
Fees and Rates:
First Data does not disclose any rates or fees on their website. I can tell you, though, that they could set you up with any number of billing option including tiered, interchange-plus, flat rate or enhanced billback – to name a few. I would encourage almost all merchants to pursue interchange-plus pricing, although First Data might hit you with high monthly minimums and mark up rates if you’re a small business. If you need help figuring out what the fair rate for you is, get in touch with us.
Based on what I’ve seen from First Data, your rep may not be willing to give good rates for every business. They provide a ton of useful and valuable services, but it might not make financial sense if you can’t get an affordable rate and fee structure.
Contract Length and Early Termination Fee:
The default early termination fee by First Data is brutal. They have something called a “liquidated damages” type termination fee. Basically, that means that they’ll charge you your minimum monthly fees multiplied by the remaining months in your contract. That can get VERY expensive. Here’s a copy of their agreement by the way. Read section (8) under “Administrative Fees” to see what I’m talking about.
If you decide to go with First Data, ALWAYS ask them to waive the early termination fee. Most sales reps will do it for you. Just make sure that it clearly states so in your contract or a signed waiver form is attached.
Sales and Advertising Transparency:
First Data does alright in this category, since they don’t use any sales gimmicks or misleading promises. You will undoubtedly find independent resellers of First Data’s products and service making their own, individual claims. For a processor as big as first Data, it’s impossible to make any sweeping judgments about their resellers. This is why in this review we’ve chosen to focus on the offerings directly sold through First Data’s corporate sales. And in this case, they’re doing an okay job.
I’d love to see some more education information, disclosures of fees or rates, and generally more specifics given. If they could talk a little bit about interchange-plus plans, I’d love them for it!
Customer Service and Technical Support:
Surprisingly, their customer service is actually pretty good. Typically, very large companies suffer in that department, but judging from the lack of customer service related complaints, it seems like First Data is in good shape. FD offers 24/7 telephone & email support, including live chat.
Negative Reviews and Complaints:
You can find the First Data BBB profile here. It has an “A” rating as of this review, with 1052 complaints (up from about 1029) in the last 36 months.
There are plenty of other review and complaint sites beyond the BBB like Consumer Affairs (about 287 complaints) and Ripoff Report (over 413 complaints) where you can get some good info, but those sites don’t do a good job of filtering out irrelevant complaints. Keep in mind, there are many, many resellers of First Data’s services, and not all of those resellers have good terms, ethical sales reps, or good customer service (although I absolutely stand behind Dharma Merchant Services). So FD might be taking the heat for some of their reseller’s shady practices. The focus of this review is on First Data directly, so I’m only going to consider the reviews and complaints from people that signed up with First Data directly.
Common complaints for First Data include:
- Expensive leases: First Data Global Leasing is probably the biggest stain on FD’s reputation. Through this leasing company, merchants are routinely paying thousands of dollar over the value of the machines they are leasing. These deals are often closed through trickery or lack of disclosure (for obvious reasons). Always be very careful when considering a lease. It’s usually not a good idea.
- Excessive fees: Most of the complaints revolve around First Data’s fees. FD seems to have a fee for everything; PCI compliance, customer service, and even the new IRS reporting fee. They also have a costly cancellation fee. Granted, they do offer some great services for those fees, so if you’re looking for a dirt cheap merchant account, then FD might not be for you. With that said, the best way to avoid overpaying for any merchant account, is to either have me help you, or you can use a service like CardFellow. If you’re the do-it-yourself type, you can negotiate with them on your own too. You just need to know what rates or terms to ask for. At the very least, you definitely want to make sure you have them waive the cancellation fee.
- Withheld Funds and Account Terminations: First Data has been known to be a bit trigger-happy when it comes to holding funds or terminating accounts. You’re going to want to learn how to avoid holds and minimize chargebacks if you plan on signing up with FD.
- Enhanced Billback: They’re also known for using a billing technique called enhanced billback, which isn’t the most transparent billing method. Check out our article about it.
Positive Reviews and Testimonials:
There are plenty of video testimonials and customer success stories on the First Data website, all of which seem like authentic endorsements. If you check them out, you will also notice that they don’t necessarily say that First Data has the lowest rates, they focus more on the huge number of processing services and solutions offered.
In many ways, it’s not fair to compare First Data to our favorite little providers. FD is selling to a completely different market, and their offerings reflect this. While they do have surprisingly good quality customer service, you’ll never get the kind of intimate attention from First Data that you can find from a smaller company. If you run a small business and want that kind of attention, I’d recommend you look elsewhere.
For big companies looking for the largest range of services and the most processing power, look no further! First Data is just enormous and their products and services are of the highest quality you’re likely to find anywhere in the industry. If you have complex processing needs and are willing to pay a little extra to find solutions, you’ll love FD.
I’m comfortable giving First Data a solid four stars. While they don’t go the extra mile to suit every small business, they do offer quality processing. If you’re interested in checking out some of our five-star processors, take a look at our awesome merchant account comparison chart. And for a reliably fair First Data account, head over to Dharma Merchant Services.