When you’re a small business starting out, even a small increase in the amount you pay for merchant services can affect the bottom line.
“None of this is in the contract,” he says. “It’s nothing we agreed to at the time of signing the contract.”
Gene and Carol Turley started with a single store in Twin Falls in 2010. By mid-summer 2012, the business had grown substantially to the point where they needed to upgrade their credit card processing.
“We were doing about 800 transactions a month,” Carol says.
Kiwi Loco owners contacted a merchant service provider and negotiated what they believed was a no annual fee, low credit card and swipe fees agreement.
When the contract arrived, they signed and sent it off.
“That’s the mistake many small businesses make when they sign up for merchant services,” Dan Harrington, president of NLP Secure, a Boise-based services provider. “They sign the agreement thinking that’s it, all’s taken care of. But, it’s not.”
He says agreements are hundreds of pages loaded with clauses in fine print that basically allows providers to act unethically.
“What businesses don’t know is that the service provider, once they’ve locked you into a 48-month contract, have the advantage,” he says.
Additional fees, surcharges and compliances can be added as the service provider sees right.
Businesses, as a result of litigation, in the U.S. and its territories can pass surcharge fee directly on to customers that use credit cards (but not debit or prepaid cards).
Your customers will feel the impact, when you pass along these surcharges. Price changes in merchandise and services the most notable and visible.
But, you can make palatable changes at the cash register. A coffee shop in Nampa is transparent about it clearly stating that purchases under a $5 will be charge 3% more when you use your credit cards. Another shop displays a sign that reads: “All cash paying customers will be rewarded with a monthly $10 gift card. For years, gas stations have posted “Cash Prices.”
Above all else, be transparent with your customers and help them understand the crunch.
BBB suggests teaching your customers to:
- Use cash for smaller purchases; offer a discount if they pay with cash
- Use a debit card with “bricks and mortar” establishments, and be a trustworthy businesses in your transactions
- Use a credit card for online purchases where they can receive greater protections
- Monitor their bank account and credit cards accounts watching for surcharge fees
In addition, educate yourself as to changes in the merchant services industry. Talk to your bank manager; talk honestly and openly about fees, recommendations and . While they do not control the surcharges, they become more aware of your situation.
Harrington says the more a business knows about the service provider and alternatives on the market the more leverage they have when it comes to renegotiation and/or sign with a provider.