It’s hard to win when competitors aren’t playing fair. Here’s a list of the acquiring industry’s most common scams. You’ll suffer if you let rivals get away with them.

Terminal leasing. An agent convinces a merchant to pay a set monthly fee, plus tax and insurance, for a set number of months. Let’s say the agent charges $119 a month for 48 months.

That’s simply too much. A terminal costs $500 wholesale, or $700 retail, but the agent collects $5,700 over four years. To make matters worse, some merchants are still making lease payments 20 years later because they failed to cancel at the end of the contract.

A monthly payment of $29 to $49 makes more sense.

Remember, however, that “rent-to-own” and “month-to-month” aren’t inherently bad. Don’t judge an agent’s intent solely on the amount a merchant is paying. The deal may include options like gift cards.

Some agents shy away from those practices, regarding them as unethical. That can prevent them from signing restaurants or fleets because they don’t have the resources.

Forty types of fees. Agents may trumpet the main rate and keep quiet about additional fees. For merchants, it’s like agreeing to buy a car for $X, only to discover the true cost amounts to $X + $50 + $100.

Savvy merchants calculate their “effective rate” by adding up the fees on a monthly statement, dividing the total by their statement’s credit card net sales and multiplying that by 100.

Deceptively low rates. Salespeople can offer a rate lower than a merchant is qualified to receive. That happens in tiered pricing where the agent quotes the merchant the debit card rate without mentioning downgrades for transactions that don’t qualify. We’ve all seen ads offering processing at 1.39%. Merchants don’t know the right questions to ask. A merchant’s swiped credit and rewards card transactions should generate a large difference when the effective rate is determined for the month.

Phony offer of $500. The agent tells a merchant that, “If I can’t save you any money on your monthly contract, I’ll give you $500.” What the agent really wants is a look at the current contract. No matter what the document says, the agent can vow to beat the rate.

How? By failing to mention that some of the fees that will show up on the statement.

Also consider a company paying straight interchange with no other fees. An agent could offer to pay $5 a month just to process with his company for the next two or three years. It would cost the processor $120 to $180, plus the cost of the setup, but it would eliminate a $500 payout. But no merchant would even switch for $60 a year savings, so the proposal is just to avoid the payout.

Several merchants I know switched merchant-services providers based on such calculations and ended up not only paying more for transactions but also paying $50 a month to lease a new terminal.

If you win a merchant on pricing, you’ll lose him on pricing. Focus on value and show merchants how this gimmick works.

Flat rate for all transactions. Merchants like the idea of a flat rate. If an agent doesn’t train a merchant to know how it works, the merchant will likely jump at the offer. The problem is that low rate of 1.45% + $0.20 on every transaction is actually the rate above Interchange. The agent, when challenged, will reply “I meant over Interchange.” But by that time your client will be your former client.

PCI standards. Unscrupulous agents pressure merchants into buying or leasing unneeded point-of-sale equipment by falsely claiming their systems can’t comply with the Payment Card Industry data security standards.

Agents who use that tactic usually insist merchants could be exposed to massive fines.

Defend yourself by keeping records of your merchants’ equipment, and when it falls out of compliance, give the merchant options. As the EMV deadline approaches, you can use your equipment spreadsheet to determine which merchants need updated equipment.

“Free” terminals. So-called free terminals are really loaners that merchants lose if they switch processors. If they change merchant-services providers, merchants have 10 days or so to return the equipment or else the acquirer debits the full amount specified on the terminal agreement form.

Such terminals don’t even qualify as “free use” equipment because they general come with minimum requirements for rates, monthly fees, monthly minimums and other fees.

ISOs offering free terminals sometimes include a clause on the forms merchants sign that specifies a 50% premium above the terminal’s “sale price” if the merchant fails to return the equipment.

“Free” point-of-sale systems also have issues. Can anyone customize the POS to a retailer’s needs? What about a convenience store that charges higher prices for coffee and donuts during peak times?

ISOs and agents should present “free” POS systems as having “no upfront costs” because costs do accompany the systems.

Contract changes. Deceptive agents happily change contracts when merchants want modifications, making notations on the document and striking out whole paragraphs. But what’s going really going on? Most contracts prohibit changes.

The agent simply transmits the parts of the contract that bear signatures to the processor. That leaves the processor unaware of the changes and unwilling to abide them if the need arises. The agent has duped the merchant.

Posing as the present processor. Scurrilous agents call merchants on the phone and falsely identify themselves as the current merchant-services provider. They do it to “phish” for information they can use to steal the business.

The caller could use the information to switch the account or could raid the merchant’s account. Teach clients to make such callers identify them by name and merchant account number.

False claims. “We are one of the top processors in the U.S.A.,” a salesperson might claim. While that’s fine for employees of processing giants, but it’s more often claimed by an agent of a sub-ISO. The agent is implying he should be trusted based on the giant’s volume.

Claiming to work for card brands. “I work directly for MasterCard and Visa,” some agents assert.

That can put merchants at ease but opens the door for scams. Warn clients about agents that make that claim. Including this line anywhere in a sales presentation should scream to a merchant that either, “I am too new to understand why this is wrong,” or “I am going to stick you because you’ll let me.” Either way, the agent should be shown the door.

Just sign here. “Just sign here and I will fill in the numbers we agreed upon and send you a copy.” You would think that no one would fall for this, yet it happens. Don’t let it happen to your clients. ƒÞ

An expanded version of this article is scheduled to appear in the April print issue of ISO&Agent. Bill Pirtle compiled Credit Card Processing for Sales Agents and its Study Guide. Reach him at


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