Merchant Services: Tips for buying right – the local agent part 1

6 Minutes read

Local sales people selling merchant services are all over the place, as far as distribution, sales tactics, knowledge, and offers.  Their offers vary by the company they represent.  Some represent multiple companies.  Is the agent selling you a cash discount or surcharge program?  Some agents have just started, and some have a little experience.  Unfortunately, many merchants have told us about their part-time agent.  Part-time agents on a larger merchant account usually equal problems.  Please ask the agent if they are full or part-time.  Assuming the agent is professional, low pressure, full-time, and has some experience, here are some suggestions to consider.

Be clear on how the support is handled for your merchant services.

First, is the support after the sale.  Who handles the installation and customer support after the sale is made?  Does the agent selling you the service handle the support?  Do they work out of a brick and mortal office?  Does the agent work from home?  Are they the only person in the organization locally?  Does the agent have a local support person to facilitate support, when they are busy?  If the agent is part of a local office, does that office have credit card terminals in inventory to replace your broken credit card terminal?  Without knowing the answers to these questions, you may get stuck with support by 1-800 WHO CARES!

The reason for these types of questions; there is minimal regulation in merchant services, and therefore, agents selling the service are everywhere.  The average lifespan in merchant services sales is 6 months or less.  There are several factors, which cause such short life in merchant services sales.  Another article may be written to chronicle those factors.

What processing company is behind the agent?

With the first set of questions past to your satisfaction, what processing company is behind the agent?  For which processor/ISO does the agent sell?  You may have found a good person selling merchant services, which is great.  We believe in long-term, effective relationships for businesses of all sizes.  Checkout the company doing the processing.  Once you have the company name, here are a few suggestions.

  1. Search on the internet for the company name and complaints.
  2. Search for the company name and look at their reviews.
  3. Ask the agent for case studies, video testimonials, and references.

Once you have the internet searches and have looked at the review, call the references.  May I suggest 3 references to call.

Thorough questions to ask the references for merchant services

It is critical to arm yourself with a few nice questions and a few zingers for the references.  You want to make sure the agent and their company are exactly what your business needs for merchant services, right?  Take a few minutes and research the references on the internet and call the references.  Does the reference’s business have a website?  What are the reference’s reviews like on Trip Advisor, etc.?  Then make the call…Thank the references for taking their time to answer a couple of questions regarding their merchant account.


Questions to Ask for merchant services

Top 8 questions to ask references:

  1. How were you connected to (insert agent’s name)?
  2. How long have you been using the (insert agent’s name)? Suggested solid answers are over 6 months, preferred 2-3 years.
  3. How do you process your credit card transactions (virtual terminal, mobile payments, or credit card terminal)?
  4. If credit card terminal, mobile payments or point of sale is in use, consider this important question. How was the equipment provided or sold, one-time purchase, lease, placement, or rental? How much did it cost?  If a lease, was it the only option offered?  How much is the lease per month?
  5. How often do you hear from (insert agent’s name)?
  6. Has (insert agent’s name) done an account review going over your rates and fees?
  7. If you’ve had to call for support, how was the experience and who handled it?
  8. If you’ve had issues, were they handled to your satisfaction?

Keep asking until your doubt has been removed.  In the end, it is your money on the line.

2 Important Follow up questions

With references checked and questions answered, may we suggest two zinger questions as a follow up. What happens when your nice agent leaves the industry and you want to change your merchant services?  This question points directly at the agreement.  Consider asking yourself, “What happens at the end of the agreement?”.  What if I cancel early or the agreement expires.    All credit card processing agreements have a term.  Those terms vary from month to month to 5 year.   Almost every agreement has an auto-renew clause with a notification period prior to cancellation without penalty, if there is one.

know your contract

Find out what happens if you leave the contract early.  Remember, most agents last 6 months in the business.  If you are solely basing your decision on the nice person, the agent, please consider knowing the agreement terms.   Refuse to take the agent’s word for the agreement.  Read it for yourself.  Too many times, agreements are left unread.  This comes back to bite business owners, and sometimes the bite is $1,000’s of dollars.  We have seen as much as $77,000 for liquidated damages early termination fees.  Know your agreement and what happens if you cancel it.

What happens to your merchant services account when rate changes come in April and October?

Who’s in control of the merchant account?  Does the agent or the processor handle the rates and fees?  Does the processor only pass through changes made by the card brands without padding their own profit margin?  Most processing companies increase merchant account fees in April and/or October and blame the card brands for the increase.  Please note, these increases are most often margin padding and profit increasing to the processor.

These increases are where we’ve heard merchants say that the credit card processing industry is “bait and switch”.  Think about it.  Why would the card brands, Visa, Mastercard, Discover and American Express continually increase their fees?  They may make small adjustments up or down on their interchange or assessments, sure.  However, .10%-0.79% increases by the card brands seem far fetched as truly coming from the card brands, which is what the ISO or processors tell merchants!  And they are.

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Dramatic effects of rate increases on merchant account fees

Many of the ISOs/processors are greedy and want more money from you.  There’s the true reason for the rate increases, more profit to corporate America.  Find a merchant services company with an agreement in writing and on the company website, where rate changes are passed through without increasing profit margins.  We have seen these “rate increases” cost merchants, literally $1,000’s of dollars per month.

We have found $1,200 per month in savings up from $500 per month in years past in a recent review of a merchant account with another processor!  This merchant has been saddled with rate increase after rate increase.  Rate increases cost another restaurant, $1,000s per month.  This restaurant showed us their rate increase letters over the past 4 years.  They were paying almost 1% margin over interchange and assessments plus $0.27 per item fee on over $100,000 per month in credit card processing.  The rate increases passed through by their bank has cost them over $12,000 per year, based upon our calculations.  Multiply that by 5 years; this restaurant has overpaid their merchant services by $60,000, conservatively!

There is a better way.  Here’s a suggestion of what to look for from a company who chooses to only pass along changes by the card brands.


All merchant service agents and processors are different.  Find one you like and do your due diligence to make sure behind the likable agent is a likable and fair deal for your business.  Ask questions about the support after the sale, the equipment, and the agreement.  Check the references of the agent and processor.

Remember, merchant services sales must be low pressure.  If it’s high pressure or the deal only lasts today, run.  Pressure sales have no place in merchant services, and unfortunately, high pressure sales are all too common.    A good deal will be there today, tomorrow, and a few days in the future.   Remember, there are certain discounts on hardware, which may be introductory or have specific timelines.  Knowing there could be an special on equipment, notify the agent of your intent to research prior to changing your merchant services.  Disclose a workable timeline for your business and comfort level to the agent.  Avoid being in a hurry to make a decision.

As a result of making a good decision on your credit card processing agreement, stay with it.  Stay up on your merchant statements.  Your merchant fees should be within .25% each month.  If there’s a variance great than .25%, ask your agent.   Consider asking your agent to review the statement with you at least yearly.

Take time in making a change for merchant services.  Your financial future in business may depend upon it.  Consider Stillwater Payments for a thorough needs audit and transparent evaluation of your current merchant account.  Give us a call today.  877-651-1655.  There are enough stresses and problems in business.  We hope the suggestions provided in this article will be helpful.

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