First Data Review
- Full line of Clover terminal, mobile, and POS systems
- Low rates available to high-volume businesses
- Extensive online knowledgebase
- Expensive equipment leases
- Four-year contract with liquidated damages clause
- High recurring account fees
First Data is one of the oldest and largest credit card processors on the planet. Established in 1971, the company has a headquarters in Atlanta, Georgia, executive offices in New York City, New York, and numerous regional offices throughout the United States and around the world.
How big is First Data? For starters, they provide services to over six million merchants worldwide, giving them the largest client base of any processor in the industry. In the United States, 45% of all credit and debit transactions are handled by First Data. Worldwide, they process $2.2 trillion in transactions annually, averaging 2800 transactions per second.
That’s about as big as it gets in the processing world. But does that kind of size translate to high-quality merchant services at a fair price? Well, yes and no. On the one hand, the company has the resources to provide every conceivable product and service you might need to run your business. At the same time, however, their processing rates, account fees, and contract terms can vary widely. In many cases, you’ll end up paying far more than you should to access all those wonderful features.
There are two ways to get connected to First Data. One way is to sign up with the company directly. The other way is to sign up with one of the many Independent Sales Organizations (ISOs) that resell First Data’s products and use them for transaction processing. Here’s an important thing to consider: some of those ISOs are really good, and others (okay, many others) are absolutely terrible. An ISO can offer you lower rates and fees than you might be able to obtain by signing up with First Data directly. However, they can just as easily charge you higher rates, tack on excessive fees, and lock you into long-term contracts with expensive early termination fees.
One ISO that uses First Data for processing is Dharma Merchant Services. They’re one of our favorite processors, mostly because they offer transparent interchange-plus pricing, fair account fees, and month-to-month billing. For most businesses (especially small to mid-sized ones), Dharma can provide you with a much better overall deal than you’d receive by signing up with First Data directly. They operate under the philosophy that if you offer your customers services at a lower cost and with fair contract terms, you’ll not only attract more customers overall, but more importantly, you’ll retain more of those customers for the long haul. Unfortunately, there are also plenty of other ISOs that don’t follow this enlightened business philosophy. They’re more than happy to charge you even higher rates (usually on a tiered pricing model) than you’d get from First Data directly, and couple it with long-term contracts, outrageously expensive equipment leases, and poor customer service. Merchant turnover is high, but they don’t care. Why not? Because they make money from those early termination fees – sometimes more than they earn from a merchant’s processing activity. Unfortunately, there are a lot more shady ISOs reselling First Data products than there are good ones like Dharma.
For this review, we’re going to focus on First Data’s direct sales channel. Their terms can – and usually do – vary from what you’d receive from a reseller. One word of warning: First Data is a very big business organization, and their services are geared to the needs of other big businesses. Although the company markets itself to small businesses, their terms and costs really aren’t a very good deal for a small or mid-sized business. The bottom line: if you’re a small or mid-sized business, you’ll want to access First Data’s features through a reputable reseller instead of signing up with the company directly. On the other hand, if your business is large enough to have some leverage in negotiating your own terms, a direct account with First Data can be a good deal. The company can save you a significant amount of money in overall processing costs if you qualify for their lowest interchange-plus processing rates.
Looking for an alternative to First Data? Compare your options:
|Best Choice For||All-In-One Payments||Nonprofits, Clover POS||eCommerce, Authorize.Net||Low-cost, Mobile, Poynt POS||Small-ticket, Canada, Mobile|
|POS and Other Features Included||Yes||Yes||Yes||Yes||Yes|
|Rate Matching/ Negotiable||Yes||Yes||Yes||Yes||No|
|Pricing Structure||Subscription||Interchange-Plus||Interchange-Plus||Interchange-Plus||Flat Rate|
|Retail Rates||0.00% + $0.08||0.25% + $0.10||0.25% + $0.10||0.30% + $0.10||2.75%|
|Monthly Fee||$99||$10||$10||$0 (minimum fee may apply)||$0|
The main benefit of signing up directly with First Data is that you’ll have access to all the special features, such as advanced data analytics, that you might not get with a reseller. You also won’t have to deal with the potential confusion that sometimes results from having one company manage your merchant account and another one process your transactions. There are no middlemen with First Data.
There are, of course, also disadvantages to getting a merchant account directly from First Data. The main drawback is that the company offers a premium product – at a premium price. The company’s services are expensive, and smaller businesses won’t have much leverage to negotiate those costs down to a more manageable level. You’ll also have to deal with long-term contracts (typically four years) and a high early termination fee if you close your account early. Your account might also be subject to enhanced billback, which we don’t like at all. Finally, the company has a reputation for being quick to hold funds or shut down accounts entirely for a number of reasons. Check out our article How to Avoid Merchant Account Holds, Freezes, and Terminations for some tips to prevent this from happening to you.
All things considered, First Data rates as a fairly good merchant account provider. We’re rating them at 4 out of 5 stars for now, but be aware that this is an averaged rating because your experience with them will vary quite a bit, depending on the size of your business. Large businesses will have a better experience with the company, while smaller ones will most likely end up paying too much for services they don’t really need. If you run a small business, we highly recommend that you approach First Data via one of their more reputable resellers, such as Dharma Merchant Services. You can also check out our Merchant Account Comparison Chart, which highlights the main features of our top-rated providers.
Table of Contents
Products & Services
As befitting such a huge company, First Data offers every conceivable product and service you might ever need to run your business successfully. These features are all very high-quality, but don’t expect them to be a bargain. You’ll pay full price, but for many merchants the cost is well worth it in terms of what they can do for your business. Here’s what they provide:
- Merchant accounts: As we’ve noted above, First Data is a direct processor, so you’ll be dealing with them for every aspect of maintaining your merchant account. You might not get the personalized customer service that a smaller company can offer, but they offer a measure of stability that a smaller organization can’t always provide.
- Credit card terminals: The company offers a variety of terminals, including both wired and wireless models. First Data’s current lineup includes new terminals that support both EMV and NFC-based payment methods. Terminals may be bought outright or leased. While pricing is not disclosed on their website, we recommend that you shop around before purchasing a terminal directly from First Data. Many of their resellers can offer you a lower price for this equipment. We also highly recommend that you avoid leasing your equipment, as you’ll be locked into a noncancelable contract which will cost you many times more than what the equipment is worth over the life of the lease. Unfortunately, First Data leases are handled through their subsidiary, First Data Global Leasing – one of the worst equipment leasing companies in the industry.
- Point-of-Sale (POS) systems: One of First Data’s most powerful features is their line of Clover point-of-sale (POS) systems. While the Clover Station is their flagship product, smaller models such as the Clover Mini and Clover Mobile are also available. While these products all boast an impressive set of capabilities, be aware that they’re rather expensive. The Clover Station, for example, typically costs around $1000. You’ll also incur a hefty service fee (usually $25.00 to $50.00 per month) to use them, which is in addition to your monthly merchant account fee. Finally, they’re proprietary products, so you can’t simply swap out the software if you’re not happy the way you can with a tablet-based system.
- Payment gateway: If your business has an online presence, First Data’s Payeezy Gateway has every feature you’ll need to accept payments and keep your customers’ data secure. It integrates with over 70 different shopping carts and accepts payments by credit or debit card, eCheck, or PayPal. It also supports multiple currencies. Pricing for this feature is not disclosed.
- Website builder: For the budding eCommerce entrepreneur, Clover Online allows you to build your website and integrate it with the Payeezy Gateway. Web hosting and shopping cart integration are built-in, making it easy to get set up and start selling online.
- Mobile processing: First Data offers the Clover Go mobile payment system, which consists of the free Clover Go app (available for both iOS and Android) and a card reader. The latest reader supports both swipe and EMV transactions, as well as NFC-based payment methods. Apple Pay, Android Pay, Samsung Pay, and Google Wallet are all supported. The reader connects via Bluetooth, so it will work with your fancy new phone that doesn’t have a headphone jack. Pricing is not disclosed for the reader. For more information on Clover Go, check out our in-depth review.
- Check processing: With Clover Check Acceptance, you can accept both paper checks and ACH (eCheck) payments. While the use of checks is declining in popularity as a payment method, this is a good service to have if your customers like to pay by check. Processing costs are also much lower, although this will be offset by the (undisclosed) monthly fee for the service.
- Online reporting: Clover Insights is an app-based reporting solution that offers a variety of analytical data about your business. While this is a standard feature these days, it’s still useful if you want to optimize how you run your business.
- Security features: Clover Security provides optimal data security through end-to-end encryption, which encrypts every transaction at each stage of processing. First Data’s website does not disclose whether this is a standard feature or an option that will cost you extra fees.
These are just the main features that First Data has to offer. There are other, more specialized features such as a developer portal for the Payeezy Gateway and loyalty/gift card programs. Unfortunately, there’s no mention whatsoever of pricing for any of First Data’s products or services. Unless a feature is specifically advertised as being free, it’s probably safe to assume that you will have to pay extra if you want to include it with your account.
Fees & Rates
First Data’s website contains a tremendous amount of information about the company’s many products and services, but there are no pricing disclosures. There’s a reason for this: the company sets prices differently for every customer, and the tremendous variability in processing rates and account fees makes it all but impossible to list them all. Depending on the nature of your business and your processing history, you might be offered a tiered, interchange-plus, or even flat-rate pricing plan. Even within those broad categories, there’s plenty of variability.
While we’d like to see a more open discussion of the possible rate plans you might encounter, we’re at least glad that First Data doesn’t employ the misleading “rates as low as…” trick that you’ll see on many other processors’ websites. Quoting just the lowest rate that the company offers is very deceptive, as only the largest and most established businesses will qualify for it.
Account fees, on the other hand, are a different matter. Many of these fees are standardized, and all merchants will pay the same amount for a particular fee regardless of how big their business is. We’d like to see more transparency on the fees that are the same for everyone.
What can you expect to pay in the way of account fees? You may or may not be charged an application fee when you apply for a merchant account, as well as an account setup fee if your application is approved. You’ll almost certainly have to pay a monthly account fee, although the amount could vary quite a bit from one business to another. This is one case where larger businesses generally pay more, although they’ll save money overall due to also paying lower processing rates. You may also have an annual fee to cover upgrades, etc.
If you use the Payeezy Gateway, you can expect to pay around $25.00 per month for it on top of your monthly account fee. Fees for PCI compliance are also very common. Additionally, there are many other smaller, per-occurrence fees such as Address Verification Service (AVS) fees, chargeback fees, etc. See our Complete Guide to Credit Card Processing Rates & Fees for more information. Lastly, be sure to review your contract thoroughly before you sign up. Most, if not all, of the fees you might be liable for will be spelled out somewhere in the fine print of your contract.
Contract Length & Early Termination Fee
A sample contract from First Data’s website spells out an initial contract term of four years, with an automatic renewal clause for successive one-year periods thereafter. However, contract length appears to be negotiable, and you might be able to get approval for a shorter initial term. While we prefer to see merchant account providers offer month-to-month billing instead of a multiple-year term, it’s unlikely that you’ll get this from First Data. However, some resellers, including Dharma Merchant Services, offer month-to-month billing as a standard feature.
Long-term contracts almost always include an early termination fee (ETF), and First Data’s contract is no exception. Their ETF is equal to your monthly minimum, plus your monthly customer service fee and your monthly account fee, multiplied by the number of months remaining in your contract. This type of liquidated damages clause could conceivably cost you over $1,000 if you close your account within the first year or two of your contract. Fortunately, it’s not too difficult to have this clause waived. However, you must negotiate to have it dropped before you sign your contract. Be sure to keep a written copy of your waiver in case you later decide to close your account.
Sales & Advertising Transparency
First Data has a very slick, professional-looking website with lots of content. Unfortunately, not all of it qualifies as useful content. There’s a lot of marketing fluff, and you’ll have to dig pretty deep to find concrete information about the company’s products and services. As we’ve mentioned, there’s also no information about pricing, except for a very small number of free features. Overall, it’s not a bad website – it just lacks most of the useful educational information that many of the company’s smaller competitors and resellers include on their sites.
One very positive thing about First Data is that they employ a full-time in-house sales team, so you won’t have to worry about dealing with independent sales agents. You shouldn’t experience the intense sales pressure or the misleading claims that you commonly have to deal with when working with independent agents. Nonetheless, you should still negotiate aggressively to get the lowest rates and the best contract terms that you can, and you definitely will want to thoroughly review your entire contract before you sign up for an account.
The company has an active social media presence, with accounts on Facebook, Twitter, and LinkedIn. These accounts are a great source of information about First Data’s newest products and services, as well as partnerships with other businesses. They also have a YouTube channel, with dozens of videos on a variety of topics. Unfortunately, there’s a much stronger emphasis on marketing efforts in these videos than there is on providing educational resources for merchants.
Customer Service & Technical Support
Very large businesses have a reputation for providing poor, impersonal customer support. However, First Data actually seems to do quite well in this area – at least, judging by the general lack of complaints about this issue from unhappy merchants. The company offers telephone support that’s available from 8:30 AM to 5:30 PM Eastern, and you can probably reach someone during the off-hours as well. Live chat is also available from 8:30 AM to 9:30 PM Monday-Thursday and 8:30 AM to 6:30 PM on Friday. If neither of these options is working for you, you can also contact them via email and expect a response within 24 hours.
First Data’s website contains an extensive Client Support section that includes links to a huge number of online support resources. You may have to hunt around a bit to find what you’re looking for, but it appears to be a comprehensive source of information. We’re glad to see them providing such a high-quality knowledgebase for merchants, as most providers offer very little in this area. For a company of First Data’s size, we’d expect nothing less.
Negative Reviews & Complaints
Remarkably, First Data is not accredited by the BBB. They have an A+ rating anyway, despite having a whopping 1030 complaints within the last three years. Of those, 322 were filed within the last twelve months. While this is undoubtedly a lot of complaints, remember that this is a company serving six million merchants. If you do the math, that means that only 0.017% of them were dissatisfied enough to file a complaint. First Data’s BBB profile also has 45 reviews, 43 of which are negative. While that’s certainly a terrible batting average, remember that satisfied merchants very rarely take the time to write positive reviews, especially on a site like the BBB, which is designed primarily to solicit complaints about businesses.
You’ll also find a further 529 complaints on Ripoff Report. Many – perhaps even the majority – of the complaints on both these sites are actually directed at one or more of First Data’s resellers and not the company itself. First Data has little or no control over the business practices of smaller companies that resell their products, so naturally their complaint volume is very inflated. Looking at complaints from merchants who signed up directly with First Data, we’ve identified the following common issues:
- Overpriced equipment leases: As we’ve mentioned above, leases are handled by First Data Global Leasing, a subsidiary. These leases come with noncancelable four-year terms, meaning that you’ll still have to make your monthly lease payment, regardless of the circumstances. You could close your account or even sell your business, but you’d continue to be on the hook for those payments. After four years, not only will you have paid far more than what the equipment is actually worth, but also you still won’t own it. Avoid leasing under any circumstances and buy your terminals First Data’s terminals and Clover POS systems aren’t cheap, but they’re a lot less expensive than what a lease will cost you.
- Excessive account fees: These complaints mainly come from merchants who didn’t bother to read their contract very carefully when they signed up. First Data charges a fee for just about everything, and most of their fees are on the high side of the industry average. The company obviously sees themselves as a luxury brand, and they charge accordingly for every service they provide. While larger businesses can afford these fees and will save money overall through lower processing rates, that’s clearly not the case for a small business. If you’re a small business looking for a cheap merchant account, you’ve come to the wrong place. First Data is not for you, unless you can sign up through a reputable reseller (such as Dharma Merchant Services).
- Withheld Funds and Account Terminations: Like any processor, First Data may freeze your funds or even terminate your account if they have reason to suspect fraud. Check out our article How to Avoid Merchant Account Holds, Freezes, and Terminations for tips on preventing this from happening to you.
- Enhanced Billback: This billing technique isn’t popular with merchants, and with a company as large as First Data, it’s generated a lot of complaints. While there isn’t much you can do about it, you can check out our article Billback and Enhanced Billback…Buyer Beware for more information about how it works.
On the positive side, First Data appears to respond to every BBB complaint. They also issue refunds and take other actions to try to resolve the merchant’s issue. While they currently have only resolved 192 out of 1030 complaints to the customer’s satisfaction, that’s still a better performance than we typically see with other providers.
Positive Reviews & Testimonials
First Data has an entire section of their website devoted to Client Success Stories. Here, you’ll find dozens of video testimonials and case studies from satisfied merchants who are using the company’s services. The videos are very polished and professional-looking, but still come across as authentic. Most of the participating merchants focus on the capabilities that First Data’s Clover products and other services have brought to their business. There isn’t any mention of the company being the least expensive option for merchant services, which is only to be expected. We also note that most of the testimonials come from larger, well-established businesses.
First Data is – obviously – a very big company, and their services are geared primarily to large businesses. Yes, you’ll see a lot of advertising aimed at small businesses on their website. Don’t be fooled! If your business is small or doesn’t have a lengthy processing history, you simply won’t have much leverage to negotiate a good deal with a provider like First Data. Instead, you’ll be stuck in a very lengthy contract with high fees and even higher processing rates.
On the other hand, if your business is large and well-established, First Data can offer you a lot of extras that other providers cannot. Account fees aren’t nearly as burdensome on large businesses, and in many cases, the significantly lower interchange-plus processing rates will balance them out and save you money overall. Regardless of the size of your business, it’s imperative that you negotiate aggressively for the best terms you can get. Don’t accept the first offer that a sales representative gives you.
The company’s biggest strength is the wide variety of products and services they can provide. You’ll never have to worry about the needs of your business growing beyond what they have to offer. Their Clover POS systems are excellent (although pricey) products and integrate with just about every third-party service on the market. Their Payeezy Gateway provides all the essential features that an eCommerce business needs to run smoothly. Our one caveat is that you should absolutely avoid leasing any of their equipment through First Data Global Leasing. Not only will you pay way too much, but also your lease contract is separate from the one for your merchant account. What this means is that even if you close your account (and possibly pay a substantial early termination fee), you’ll still be on the hook for monthly lease payments on equipment that you might not even be able to use anymore.
Overall, we’re giving First Data a respectable 4 out of 5 stars rating. This is an average rating because your experience with the company will vary a lot depending on the size of your business. First Data rates a little higher for large businesses, and a little lower for smaller ones. If you’re a small business looking to take advantage of First Data’s powerful products and services – but without the long-term contract and excessive fees – then you should definitely take a look at Dharma Merchant Services. They’re hands-down the best overall First Data reseller we’ve found. For a quick overview of Dharma and other top-notch providers, check out our Merchant Account Comparison Chart.