Flagship Merchant Services Review
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- Date Established
- Charlestown, MA
Flagship Merchant Services is a merchant account provider headquartered in Charlestown, Massachusetts. First established in 2001, the company was later acquired by iPayment in 2012. Today, Flagship operates mostly as a reseller for iPayment, and many of the products and services the company offers are actually provided by iPayment.
This business arrangement has had its advantages and disadvantages. On one hand, the tighter integration between Flagship and its processor should, in theory at least, smooth out some of the miscommunications and finger-pointing that often occurs between merchant account providers and their third-party processors. In actual practice, however, this hasn’t always been the case. Flagship experienced a surge of merchant complaints shortly after its merger with iPayment, possibly due to the numerous corporate changes that inevitably come with an acquisition. Things seem to have been smoothed out by now, although the company still has a rather high complaint volume for a business of its size.
Flagship was one of the first of the traditional merchant account providers to offer free account setup, with no application or account setup fees being charged. The company was also among the first to offer true month-to-month contracts, with no early termination fees for closing your account. While very few merchant account providers charge account setups fees anymore, the absence of an early termination fee (and the long-term contract that goes with it) is still relatively rare among the larger providers and is one of Flagship’s most attractive features.
For eCommerce merchants, Flagship will waive your Authorize.Net gateway setup fee (normally $49.00 if you go with Authorize.Net directly). They’ll also set you up with an online shopping cart for free. If you need mobile processing, they also offer a free mobile swiper and app. While free to set up, these features still come with monthly fees, so you’ll have to do the math and compare your anticipated costs with that of other providers. Overall, the company provides a fair value for what they charge. I’m not crazy about Flagship’s annual PCI compliance fee or monthly minimum requirement, but these are industry-standard fees that you’re likely to encounter elsewhere as well. The PCI fee comes directly from their processor, so don’t bother trying to negotiate it.
Flagship signs up tens of thousands of merchants each year, so complaints are always going to come up. Some complaints are isolated incidents, while others are parts of larger trends. The most notable trend in complaints I’ve seen from merchants using Flagship regards fee disclosures (or rather, the lack thereof). Many users state that fees like PCI compliance fees, PCI non-compliance fees, monthly minimums, and non-qualified processing rates were not properly disclosed or explained by sales reps. Other common complaints regard funding holds and sudden, unexplained account terminations. Funding holds and risk management are complex and common issues across the industry, so I usually don’t pass any judgment regarding these complaints without full knowledge of the situations. However, the failure to fully disclose and explain all fees is 100% preventable and entirely unacceptable.
Here’s the good news. Since you’re here reading this article, you’ll get all of the fee information you need to negotiate the best contract terms possible. So while I don’t like to see so many complaints about nondisclosure of fees – and I’m lowering the overall rating to reflect it – if you’re careful during your account setup you can get solid service and great rates from Flagship. Just don’t expect your sales agent to be 100% forthcoming. You will have to assess your fees carefully.
Overall, Flagship Merchant Services rates as a 3.5-star provider at the moment. I love that the company has no early termination fee and that it does its best to add value to your processing account. Flagship is doing better than average (though not without some troubles), and, in many cases, they perform very well indeed. Check them out, and please come back to report on your experience.
If you’d like to examine other options, check out our Merchant Account Comparison Chart for a look at some of our favorite providers. You can also try our Merchant Account Finder tool to get matched with the perfect provider for your unique needs.
Products and Services:
Flagship Merchant Services covers all the bases with products and services to support retail, mobile, and eCommerce businesses. Nothing really sets Flagship apart from the pack here. Their website doesn’t provide much more than a cursory overview of their offerings, which include the following:
- Merchant accounts: Flagship Merchant Services is not itself a direct processor. Since its acquisition by iPayment, Flagship’s merchant accounts are primarily set up through that company. First Data is also sometimes used, especially for older accounts that were established prior to the acquisition.
- Free credit card terminal: For retail merchants, Flagship will provide one “free” credit card terminal as part of your initial account setup. While you won’t be saddled with an expensive terminal lease, be assured that a portion of your monthly account fees are going toward insuring this terminal and keeping it updated. If you’ve chosen to buy your own terminals (which we highly recommend, Flagship will re-program them for free as part of your initial account setup. The company is currently featuring the Verifone VX 520 terminal on its website, which supports both EMV and NFC payments.
- Payment gateway/virtual terminal: For eCommerce businesses, Flagship offers a choice of either the Authorize.Net payment gateway or their own propriety Quiq gateway service. Setup of either product is free (a $49.00 savings in the case of Authorize.Net), but you will pay a gateway fee of $7.95 per month thereafter. Both products include an online shopping cart and APIs to customize your site’s integration with the gateway.
- Mobile processing: If you need to process on-the-go, Flagship will set you up with iPayment’s MobilePay app and card reader. MobilePay is available for both iOS and Android smartphones and tablets and now comes with an EMV-compliant card reader. While the app and card reader are free, there is a monthly fee for this service. MobilePay also includes the MobilePay Merchant Portal, an online system that offers inventory management, analytics reports, and other features. While it’s not as fully-featured as Square, it’s a nice addition to your Flagship merchant account if you need mobile capabilities.
- Banq POS: Another iPayment product, Banq POS is an iPad-based POS system that can also run on your iPhone or through a web browser. While it lacks the robust feature set of a full POS system, it’s a cost-effective solution for small or medium-sized businesses.
Fees and Rates:
When you first see the Rates & Fees tab on the top menu of Flagship’s landing page, you might be hopeful that you’re going to get a full disclosure of the numerous account fees and processing rate plans that the company offers. This hopefulness quickly turns to disappointment when you actually click on the tab, which leads to a simple, one-paragraph statement telling you that fees and rates are highly variable, and therefore cannot be disclosed. While it’s true that processing rates are too complex and variable to be fully disclosed, I would like to see Flagship offer some concrete information on the standard fees that all merchants will have to pay for their accounts. As it stands, the only actual number mentioned on their site is a misleading claim that their processing rates start at 0.38% + $0.19 per transaction. This is actually a debit card rate – credit card rates are much higher.
Flagship offers both tiered and interchange-plus pricing rate plans, but will probably try to set you up with the generally more expensive tiered pricing unless you specifically ask for interchange-plus. It’s up to you to negotiate the best deal that you can get, which should include interchange-plus pricing at a minimum. As a general rule, merchants with higher monthly processing volumes will be able to get lower rates.
While Flagship goes to great lengths to tell you about all of the fees they don’t charge you, be aware that most of these fees are only associated with getting your account set up initially. Unfortunately, there is no disclosure whatsoever on their website of any of the monthly and annual fees you’ll have to pay once your account is set up and running. While Flagship’s in-house sales agents generally disclose these fees when you’re negotiating your contract, there are still a lot of complaints from merchants alleging less-than-full disclosure of some fees. As always, be sure to carefully review every word of your contract before signing up to avoid any unpleasant surprises.
Fees you can expect to pay include the following:
- Monthly account fee. This fee varies, but seems to start at around $7.95 per month.
- Monthly minimum. Most contracts will automatically include a $25.00 monthly minimum. If your processing volume is low enough to be affected by this fee, you’ll want to negotiate to have the minimum lowered or even waived altogether. Likewise, seasonal merchants should ask to have it waived for the months when they’re not using their accounts.
- Gateway fee. Expect to pay $7.95 per month for either the Quiq or Authorize.Net payment gateways.
- PCI Compliance fee. Flagship will charge you $99.00 per year for security scans and other features to keep your account compliant with PCI DSS standards. While this is generally an industry-standard fee, there have been a lot of complaints from merchants about sales agents not disclosing it. Since Flagship uses month-to-month contracts, I’d rather see this as a monthly charge rather than an annual one.
- PCI Non-Compliance fee. If you don’t take the necessary steps on your end to keep your account PCI-compliant, Flagship will charge you an additional $19.95 per month for being non-compliant. You can avoid both non-compliance and this penalty fee simply by filling out the required PCI assessment survey.
You can also expect to pay monthly fees if you sign up for Flagship’s optional mobile processing or POS services. Miscellaneous additional – and unavoidable – fees include chargeback fees and network fees, such as the Visa FANF. Overall, Flagship’s fees and rates are generally reasonable and compare well with the industry average.
Contract Length and Early Termination Fee:
One fee you won’t have to worry about with Flagship is the notorious early termination fee that many processors charge if you close your account before the end of your contract. The company offers true month-to-month contracts, which is a growing industry trend and one we’d like to see every processor implement.
While having a month-to-month contract should make it much easier to close your account, it’s still not a perfect process. Be aware that some merchants have reported difficulty in closing their accounts, and Flagship has historically blamed the processor for this problem. If this occurs and you are charged monthly fees when your account should have already been canceled, Flagship will usually reimburse you those erroneous fees – if you complain loudly enough. You’ll want to carefully follow the instructions in your contract for closing your account, including returning all of the “free” equipment you received when you first opened your account.
In part to rectify this issue, in 2014 Flagship instituted a company-wide reporting system for merchant contact. If you contact Flagship for any reason, the contact will be logged and addressed on the same day. This will help to make representatives more accountable for handing account closures in a timely fashion. But remember – it’s up to you to file the actual paperwork. The sooner you send it to them, the sooner your account will be closed.
Sales and Advertising Transparency:
While I have confidence in the sales team at Flagship, and have spoken to their salespeople in the past, I believe that a company’s website sets the tone for how it does business in an overarching sense. This marketing is controlled and decided at the corporate level, making it a good predictor of the general sales practices and attitude.
Flagship makes very few fee disclosures on their website, offering visitors little initial guidance or educational material. The only rate quote provided is a regulated debit quote, which is much lower than the average credit card processing rate:
Rates start at 0.38% + $0.19 per transaction with Free Account Set Up.
Consider now that the average interchange fee is close to 1.8%. They don’t even offer a footnote explaining that this rate will only apply to some debit transactions, nor do they go on to explain how rates are decided anywhere on the Flagship site. While I accept that this is a marketing choice and that – in their defense – debit tends to make up 40-50% of transactions overall, 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, regardless of how thorough the salespeople are on the phone. While this is a low regulated debit quote, that doesn’t necessarily mean that your overall cost will be lower.
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 (Helcim and Dharma Merchant Services, to name a couple). While your merchant account does come with one “free” terminal, pricing information would be nice to know for merchants who need additional terminals.
When visiting the Flagship home page, readers might be impressed to see that Top Ten Reviews rated them the number one merchant account provider in the industry for eight straight years. That’s a pretty big deal, you might think. While it certainly seems like a commendable achievement, a closer look reveals that Flagship doesn’t actually link to any of those reviews. That’s probably because they’ve now fallen to the number six position, overtaken by some of our highest-rated processors, including Helcim and Dharma.
On the bright side, I’m glad to see that Flagship Merchant Services uses an in-house sales team for most of its accounts since independent sales reps are known for unregulated activities and overall poor training. I do still have concerns, however, so if you’ve experienced otherwise, please leave us a comment.
Customer Service and Technical Support:
While Flagship Merchant Services advertises 24/7 customer support, 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. While this is not unusual in this industry, it’s still a little disappointing. Also, in many cases Flagship will have you contact the processor directly, and I haven’t exactly heard stunning feedback about iPayment‘s customer service reps.
I really love that Flagship makes the person who sold you the service 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 have been 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.
The other good news here is that, as I mentioned earlier, Flagship has instituted a new company-wide customer contact reporting system. This means that your calls and emails are logged and reviewed, and representatives are required to address your concerns the same day you voice them. This added level of accountability has already improved merchant support at Flagship, and I have a good feeling about their future in this regard.
Still, you should be aware that in the past there have been issues, as evidenced by our readers’ comments, especially during 2013.
Furthermore, the FAQ on Flagship’s website leaves a lot to be desired, and it’s the only self-service customer support available.
Negative Reviews and Complaints:
Flagship Merchant Services has only been accredited by the BBB since 2015, and currently has a B rating. Unfortunately, this represents a downgrade from the B+ rating the company had at the time of our last review update and even further downgrade from the A- they used to have.
Flagship’s internet reputation took a serious hit back in 2013 in the immediate aftermath of its acquisition by iPayment. Since then, the company has maintained a fairly high volume of complaints for a business of its size. Flagship currently has 176 complaints with the BBB filed within the past three years, which is unchanged from our previous review. 82 of the current complaints were filed within the past twelve months, up from 68 complaints during our last update. In addition to the high complaint volume, Flagship’s BBB profile includes an unusually high number of unfavorable reviews, with 86 customers reporting a negative experience with the company.
Note that some of these complaints are duplicative, as some merchants have copied and pasted the same complaint onto multiple websites. Nonetheless, taken together they point to several common complaints against Flagship, including the following issues:
- 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 have in the past failed to help merchants avoid this fee in many cases. The cost is an additional $19.95 per month for non-action. But the good news here is that as of mid-2014 Flagship has stepped up its efforts to help merchants avoid this fee by having account reps discuss it with merchants during their welcome call. I’m hoping to see this complaint peter out with time. If you complete the PCI compliance questionnaire, you can avoid this fee.
- Difficulty canceling service: This issue comes up over and over again, so I know something is up. 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 want to get rid of. I’m hoping to see this complaint taper off since Flagship Merchant Services has taken the initiative to increase accountability and transparency when it comes to account rep and merchant communications. If you feel you’ve been treated poorly in this regard, Flagship will usually give you at least a partial refund. It seems like, as of late 2016, this complaint is on the downtrend.
- Poor customer service after sign-up: 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. While Flagship appears to be taking steps to correct this issue, time will tell if they’ve done enough. Results seem mixed based on recent complaints.
- Billing issues/funding holds: In these instances, Flagships points the finger at its processor iPayment, and perhaps rightfully so. After all, these mistakes often do come directly from the processor. In my opinion, though, Flagship 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. Some of these issues are unavoidable, though, so these complaints should be taken with a grain of salt.
The good news here: Flagship is generally willing to provide at least partial refunds to make things right. In fact, Flagship has become one of the most accommodating and generous providers I’ve seen in terms of refunding fees, especially when the BBB is arbitrating. But ideally, this wouldn’t be an issue to begin with.
Positive Reviews and Testimonials:
You can find a few merchant testimonials on the Flagship homepage. There is also a small display of logos for companies that utilize their services, including Subway, Verizon, Avon, and others. Aside from that, you won’t find any intensive case studies or reviews.
One of the most substantial recommendations for Flagship Merchant Services comes from the popular review site Top Ten Reviews, which reviews everything from consumer products to career choices. Flagship features Gold Awards from Top Ten Reviews prominently on their website, but they’ve now fallen to the number six position in the most recent Top Ten Review. Reasons for this decline include the $99.00 annual PCI compliance fee and other fees that are not disclosed on their website.
Flagship has also received glowing praise from Business News Daily, who rated the company as their Best High Volume Credit Card Processor in a recent article. While the article tends to downplay some of the significant problems that merchants have had with the company, it does provide a pretty comprehensive overview of Flagship’s stronger features.
One surprising source of praise comes from the BBB. As we mentioned above, the company currently has 86 negative reviews posted by customers on its BBB profile. So, it might come as a surprise that the company also has a whopping 218 positive reviews. So, how many positive reviews do most other merchant account providers have on their BBB profile? Well, zero. Most people see the BBB and other consumer protection websites as a place to air their grievances, and so it’s pretty unusual to see any positive reviews – let alone such a high volume of them.
Look closer at those positive reviews, and some obvious trends emerge. Like the negative reviews, only the reviewer’s initials are posted, making them essentially anonymous and unverifiable. While some of the positive reviews are well-written and point to specific areas where the reviewer thought that the company provided a helpful service, most of them are generic, 1-2 sentence blurbs that don’t tell you why the reviewer liked the company. Perhaps most disturbing, the trend chart shows that nearly 70 of these positive reviews (i.e., nearly one-third of the total) were posted in the same month back in 2015. While I can’t say with absolute certainty that any of these reviews are fake, they are highly suspicious, and I wouldn’t put too much stock in them.
Final Verdict on Flagship Merchant Services:
Despite all the legitimate criticism of the company, there’s still a lot to like about Flagship. The company generally provides a good value, deals with most active sales in-house, and lets you leave at any time without penalty. I love the freebies offered, even if they’re presented in a somewhat gimmicky way at times. Flagship is doing a fairly good job overall. It seems like they slipped a little bit in 2013 – maybe due to growing pains stemming from their acquisition by iPayment in 2012. Things have mostly stabilized in 2016, although many of the issues that have made merchants unhappy have not been entirely resolved.
While some complaints that come in under the Flagship name are actually criticisms of its processors (namely iPayment), it’s Flagship’s responsibility to provide excellent arbitration, mediation, and prevention when it comes to processing issues. Some of these issues (such as chargebacks and funding holds) are unavoidable, but still incredibly frustrating for merchants. Be sure to take complaints regarding these and similar issues within that context. I don’t think that Flagship’s marketing at the corporate level is nearly as straightforward or useful as other providers (check out Helcim, for instance), but it’s not really harmful either. Or at least it wouldn’t be if sales agents filled in the gaps effectively. Unfortunately, this doesn’t happen 100% of the time.
Flagship gets 3.5 out of 5 stars for the moment. They perform slightly better than the industry average, but still have plenty of room for improvement. I’m comfortable recommending Flagship to you, but – as always – encourage you to enter your sales consultation reservedly and as an educated, informed merchant. So read up, then go ahead and check out Flagship Merchant Services!
If you’d like to see what other options are out there, take a look at our comparison chart.