Payment Processing Companies: The Common Mistakes Merchants Make
E-commerce has come a long way. Gone are the days when getting a merchant account for an online business was as challenging as a Greek puzzle. Nowadays, payment solutions are available to even the newest and simplest traders. As expected, merchants are opening processing accounts every day; and consequently, many are signing contracts unbeknownst to what they are getting into.
The following are some of the most recurrent mistakes that business owners make when choosing their processors, and how best to avoid them.
- Skimming through the merchant contract
Applying for a payment processing account involves filling some forms and signing an agreement. Many applicants are usually willing to submit all the relevant information about themselves and their businesses, but when it comes reading the T&Cs of the contract, only a few take the time to go through the section carefully
The T&Cs section outlines the guidelines to be followed in the usage of the service, as well as your relationship with the account provider. Unfortunately, the documents are usually filled with complicated legal clauses and confusing wording, which automatically discourages the reader.
The most common eventuality of not reading the T&Cs is frustrations resulting from unforeseen charges. And when a merchant complains, you’re at fault because the information was in the contract all along.
- Committing to a volume-of-sales agreement
Some processors include a condition in the contract dictating the minimum amount of money a merchant must process within a specified period. Failure to meet the set target can result in increased transaction fees or other financial penalties.
A good number of SME owners either ignore or downplay this condition, which results in strained profits, bankruptcy and premature business closures.
When applying for a merchant account, ensure the contract doesn’t have any volume commitment. If it does and your processor is unwilling to negotiate, move on to another company. EMB is a good example of a firm that offers reliable processing services without volume commitments.
- Going with the cheapest option
Merchants are often swept off their feet with unbelievably low transaction charges and near-zero monthly charges, only to realize later that the processor either didn’t have the expertise they promised or had additional fees hidden in the contract.
Instead of rushing to shake hands with the most cost-friendly firm you can find, your priorities should lie with a processor has enough knowledge about your business, and is capable of servicing your needs as required.