Host Merchant Services Review
- Transparent interchange-plus pricing
- No early termination fee
- No setup or application fees
- No monthly minimums
- Good customer support
- Good website and advertising
- Can be expensive for low-volume merchants
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 not a fellow musical theater fan), HMS Pinafore is the famous Gilbert & Sullivan comic opera based at sea, where the “HMS” stands for “Her Majesty’s Ship” in the British Royal Navy.
The point is, I’m going to have to ask you to please tolerate any nautical/musical references in this review. I made the mistake of playing the soundtrack in the background as I researched HMS, and now I simply can’t help myself.
Any other Gilbert & Sullivan fans out there? What, never? No, never? Hmm…I’ll just crawl back into my musical-theater-nerd hole now. HMS-not-Pinafore is based out of Newark, Delaware, with additional offices in Naples, Florida. They are a registered ISO of Wells Fargo Bank and use TSYS as their primary back-end processor. Host Merchant Services CEO, Lou Honick, founded a web hosting company called HostMySite.com in 1997, which he sold to a private equity firm in 2008.
Honick launched Host Merchant Services in 2009. The aim was to leverage his strong technical background, focus on customized solutions, and a “service first” value proposition to effect positive change in the payment processing industry. Not surprisingly, many of HMS’s merchants are other web hosting companies and cloud service providers. HMS also incentivizes these clients to in turn recommend Host.
Two main points stand out for Host Merchant Services as a merchant account provider. First, they only offer interchange-plus pricing and will readily admit if their rate structure won’t work the best for your business. It could be too cost-prohibitive for a very low-volume, mobile business, for example. Secondly, they have almost no complaints at the BBB and other consumer review sites, which directly corroborates their “service first” story. That and the fact that positive testimonies are readily available. Although HMS’s client list could be seen as short (around 6,000), the lack of negative response is not because they aren’t out there serving any customers. So even if you’re low-volume, you’ll likely receive excellent customer service with HMS. That can be a huge deal.
To check out their rates and fees, as well as explore other important aspects of HMS, I invite you to come aboard the ship for the rest of this review. Shall we shove off and head to sea?
Host Merchant Services
Table of Contents
Products & Services
Host Merchant Services offers a full range of products and services for just about any type of business. Here’s a brief overview of its primary services:
- Merchant Accounts: HMS offers traditional merchant accounts with interchange-plus pricing for both ecommerce and in-person businesses. HMS also sets up specialized accounts with customized pricing for large and small ticket businesses, nonprofits (HMS Gives), and high-risk industries. Offshore accounts are also possible through its international acquiring partners. Information on each of these scenarios can be found under the “Programs” tab on the website, but I’d recommend talking to HMS directly if you think your business qualifies.
- Credit Card Terminals: If you’re a brick-and-mortar operation, HMS will hook you up with up-to-date terminals. You may qualify for at least one free EMV card terminal upon sign-up if you process over $20K per month. If you process a lower volume, you can negotiate a good deal on the purchase of terminals through HMS. The Credit Card Machines page of its website gives a good rundown of the current lineup, which includes models from Ingenico, Verifone, Dejavoo, and other manufacturers. All models support EMV payments, and several also support NFC-based payment methods, such as Apple Pay and Google Pay. Prices are not disclosed, however. HMS will also reprogram your existing terminals at no extra cost, and they are philosophically against terminal leases.
- Virtual Terminal & Payment Gateway: Transaction Express is the combined virtual terminal and integrated in-house gateway offered by HMS. Along with the tokenization and encryption of customer data, Transaction Express supports ACH services/recurring billing, check imaging, wireless processing, batch processing, and multi-location networking. HMS also resells the Authorize.Net (see our review) gateway and supports most other third-party gateways.
- Mobile Processing: HMS promotes an app called ProcessNow from TSYS. Regardless of monthly volume, most mobile merchants will also qualify for a free magstripe reader to use in conjunction with this app.
- Point Of Sale (POS) Systems: Retail businesses and restaurants may be interested in Host’s POS solution called Bonsai. Developed by the hardy crew of HMS, Bonsai is particularly well-suited to the hospitality industry. It was designed to compete with upmarket POS systems, incorporating a high degree of support, customization, and automation at a lower cost. Various POS systems from Clover, Vital, and SwipeSimple are also available. You can find plenty of information about the company’s POS product lineup, including pricing details, on its Point of Sale web page.
- Shopping Cart Integration: HMS offers to help you find a shopping cart that fits your specifications and then provides support in ensuring it runs smoothly.
- Gift Cards & Loyalty Cards: HMS offers to customize a system for you to accept one or both types of cards.
- Web Hosting: An homage to Captain Honick’s roots in the web hosting industry, a merchant account with HMS includes a free basic website and business email. You’ll pay extra for some additional “premium” features.
- Partnering/Referral Program: If you are happy processing payments with HMS and are looking to sweeten the deal, you can refer your business-owning clients to them. You essentially become a reseller for HMS merchant accounts to your end customers, and HMS handles the application and approval process.
- Merchant Cash Advance: If you need money to launch or expand your business, HMS offers merchant cash advances from $5,000 to $500,000, with funding in as little as 24 hours. Make sure you fully understand what you’re getting into with a merchant cash advance. Take the time to compare options carefully and consider alternatives before jumping on this.
- PCI Compliance/Data Breach Insurance: HMS partners with Trustwave for PCI compliance and includes $100,000 of data breach insurance with all merchant accounts. While you do have the option of opting out of this coverage, we don’t recommend it.
Fees & Rates
HMS offers interchange-plus pricing to all clients, with guaranteed rates for the life of your merchant account. Its Pricing page offers extensive disclosures of both processing rates and account fees.
While the published rates are for businesses processing over $10,000 per month, there are no monthly minimums with HMS. According to its website, HMS will customize a rate package for lower volume accounts. Based on my previous conversations with the captain, you can expect around 0.50%-0.55% + $0.10 as a starting point for volumes under $10K. The published rates for over $10K are a baseline. Higher volume businesses will certainly have the flexibility to negotiate.
- Retail: Interchange + 0.25% + $0.10 per transaction
- Restaurant: Interchange + 0.20% + $0.09 per transaction
- eCommerce: Interchange + 0.35% + $0.10 per transaction
- Application/Setup Fees: $0.00
- 1099 Reporting Fee: $24.00 per year
- Account Fee: $14.99 per month
- Gateway Fee: $5.00 – $10.00 per month
- Voice Authorization: $0.75 per authorization
- Batch Processing Fee: $0.20 per batch
- PCI Compliance Fee: $0.00
- Chargebacks: $15.00 per incident
- Retrievals: $20.00
- PIN Debit/EBT Fee: $0.00
- Address Verification Service (AVS): $0.00
- Early Termination Fee: $0.00
Featured Payment Gateways:
- Transaction Express: $5.00 per month (basic) or $10.00 per month (full-featured) + one-time $10.00 setup fee
- Authorize.Net: $9.00 per month + $0.05 per transaction
- NMI Gateway: $7.00 per month + $0.06 per transaction (basic) or $10.00 per month + $0.08 per transaction (bundled)
While we’d rather see no annual fees and perhaps a lower monthly fee, the rates themselves are fair and stand up well to some of our preferred providers. You’ll note that rates for restaurants are lower than for retail. This is due to the generally lower risk/higher volume nature of the food business. Additionally, HMS is specifically looking to attract restaurant owners to its customized POS system.
HMS now also offers a cash discount program, which they enthusiastically call their “Free Payment Processing” program. This program automatically adds processing costs to each transaction, meaning that you get 100% of the advertised price and your customers get to pay extra for using their credit or debit cards. The program is available for free to merchants processing $5,000 per month or more. If your business processes less than that amount, you can still sign up for the program, but it will cost you $20 per month to participate. The program is also limited to businesses who don’t need to use the “tip adjust” function when processing their transactions. We highly recommend that you check out our article, The Truth Behind Free Credit Card Processing, before deciding to sign up for this program.
Contract Length & Early Termination Fee
There are no long-term contracts or early termination fees with HMS. Your merchant agreement comes with an attached waiver of any cancellation fees, so keep your eyes peeled for this. In the Partnership FAQ, they also guarantee to pay up to $250 in owed early termination fees for referred clients and $500 if that referral client processes over $50,000 per month. Perhaps this deal only applies in a referral situation, but if you’re considering HMS and are facing an early termination fee with another provider, it certainly doesn’t hurt to ask!
Sales & Advertising Transparency
A glowing record of positive reviews and almost no online complaints continue to support Host’s reputation as an honest company that hardly ever sinks at sea. All my interactions with HMS, and particularly with the captain, have been refreshingly forthright and helpful. As of the last update, my only remaining transparency concern was that they did not publish their rates. Happily, HMS has now officially joined the ranks of merchant account providers who publicize processing rates on their websites.
I know HMS wrestled with this issue internally, and it’s tough when a big part of your value proposition is never to “lead with rates.” But in an industry where the lack of advertised pricing often indicates a dishonest or tricky company, I think they’ve made the right decision to create a dedicated pricing page. It’s straightforward and easy to find, which I also greatly appreciate. The rates themselves are fair, so there was never anything for these HMS sailors to be shy about in the first place.
Although HMS primarily uses an in-house sales team to market and set up accounts, we’ve heard reports that it also uses independent sales agents as well. Fortunately, this hasn’t resulted in any complaints about the company’s sales practices. Unlike the majority of vendors in the processing industry, HMS appears to keep a tight rein on its independent agents. So it shouldn’t make any difference to you as a prospective merchant whether you work with a company employee or an independent agent.
Customer Service & Technical Support
I’ve already pictured the crew of HMS as sober men and true in sailor suits. So it wasn’t a surprise to learn that they “stand to their guns, to their guns all day,” seven days a week, 365 days a year for tech support. “Service first” is a company motto, and regular office hours are Monday-Friday, 8 AM – 6 PM EST for help with your account. They also have a live-chat feature that’s available during these hours. After hours, you may be passed to TSYS tech support or another third-party company associated with your account, but HMS reviews and personally follows up on all of these conversations.
I was shown directly to the captain’s quarters when I called the first time, but by then, I had exposed myself as a reviewer. I’m a pretty bad liar, so I didn’t even attempt to pass myself off as a merchant over the phone. I did test the helpline a second time during off-hours and got through to live TSYS tech support quite easily. In the process, I also left a generic non-reviewer message for HMS customer service and was called back by none other than Captain Honick’s first mate, the COO. I admit I was feeling pretty darn special by then. Of course, there is no guarantee you’ll always reach the C suite when you call, but it’s quite encouraging to know they are more than willing to chat.
Other support literature on the website is a combination of older articles and a more current blog focusing on industry news and topics of interest to card processing merchants. This content is frequently linked on the HMS Twitter and Facebook pages.
HMS also advertises local, on-site troubleshooting for malfunctioning terminals. The range of this service is not advertised, but the Captain tells me it’s typically around a 150-mile radius from their offices in Newark and Naples. I suspect a large portion of businesses with HMS-installed hardware are in New England or Florida and can benefit from this local touch, which subsequently contributes to the high customer satisfaction rate.
Host Merchant Services is one of the very few providers we’ve found that has more positive feedback from users than complaints. Their BBB page currently includes two 5-star reviews from users and only one complaint. That’s a far cry from what you’ll find with most vendors in the credit card processing industry.
Negative Reviews & Complaints
HMS has been accredited with the BBB since March 2011, with an A+ rating and only one complaint within the last three years. The company has clearly gone to great lengths to address the sole complaint against it, including closing the merchant’s account and refunding all fees. In fact, the actual issue seems to stem from a third-party vendor who failed to stop the automatic billing after HMS closed the merchant’s account.
Positive Reviews & Testimonials
The HMS website now includes an extensive Testimonials page that features positive reviews from almost four dozen merchants from around the country. Unlike many testimonials you’ll find elsewhere, most of them include detailed discussions of particular features that were useful to the merchants offering them. HMS gets particular praise for its one-on-one customer service and dogged determination to solve whatever problem a merchant may have. We encourage you to check out the Testimonials page where you can see how business owners just like you have benefited from working with Host Merchant Services.
As we’ve mentioned above, the company also has two positive reviews on its BBB profile. This is unusual not just because merchant account providers have a bad reputation in general, but also because the BBB website is a place for users to air their complaints. Very few merchants take the time to post positive reviews, so we’re glad to see that HMS has earned this unusual distinction. In reviewing all the positive feedback that the company has received, we’ve found that competitive fees and rates, attentive tech support, and no long-term contracts were the most commonly cited features of their service.
Host Merchant Services
I’ve done a fair amount of imagining sailor suits and light opera in this review. While you’ve been very patient with me, you might curse me later when you can’t get those catchy Gilbert & Sullivan tunes out of your head. But allow me to complete my HMS mental picture now that I’ve finished my research.
Besides referrals from happy customers, HMS gains most of its clients by reaching out directly to local brick-and-mortar companies or by tapping into Captain Honick’s rich network of web-based business connections. HMS is thus able to effectively close those sales by customizing a suite of products and services for each client and by explaining its inherently fair system of interchange-plus pricing. Then they enhance client loyalty with attentive customer service and secondary partnerships. They do an excellent job at this and have a great reputation to prove it.
With the addition of rate and fee specifics on the website, I can now confidently give four stars and one star more for the hardy Captain of the Pinafore. I’d like to think that reading the previous iteration of this review was the final push that made them put up a pricing page. Maybe that’s just a continuation of my little HMS fantasy, but regardless, we now have further proof that this company takes transparency very seriously. I’m glad to see they’ve adapted to the ever-increasing demand for clearly advertised rates in the merchant account industry.
I heartily recommend checking out HMS, especially if you are based in Delaware, Florida, or Colorado, or if you run a web hosting or cloud service provider business. Give Lou Honick and his crew a call and see what HMS can do for you. Hopefully, he won’t mind you calling him captain.
Credit Card Processor Rating Criteria.