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5 tips for fielding merchant services sales pitches

By Mary Lou Jay

As a business owner, it may be hard to discern the truth from a really good sales pitch from a merchant service provider. While some may truly provide your business savings, others just don't deliver.

Here are some tips for avoiding sales traps and finding the (real) good deals.

1. Look for the catch
Has a processor offered you a free point of sale (POS) terminal? That's a good time to remember the old adage "there's no such thing as a free lunch," says Eric Cohen, CEO of Merchant Advocate, which advises businesses in the selection of merchant services.

"Nothing is really free. Companies may give merchants a free POS, but then they're locking them into rates and proprietary systems," Cohen says.

That may make it difficult to switch to a different processor down the road.

"Another sales pitch is, 'Use our terminal and your debit cards will cost you zero,' " Cohen adds. merchant-sales

The catch here is that you may have to lease a terminal at a high monthly rate for three or four years, paying much more than you would if you bought the terminal outright.  

2. Ask the right questions
Focusing on the processor's rate isn't a good way to comparison shop, says Michael Hass, president and CEO of PDX Enterprise Solutions, a company that offers various processing and POS systems.

"It's misleading because it doesn't put the rate into context with other rates," he explains.

For example, says Hass, merchants often care only about the discount rate -- the rate that applies to most transactions. Yet not all cards and transactions are equal and, for some, that rate won't apply. Processing rewards cards or keyed- in transactions may involve extra surcharges.

If you're comparison shopping, explain your business's situation to a processor and be ready to tell them how you plan to accept cards, whether you want to process via dial-up or Internet and whether you want a traditional or a cloud-based POS system.

Hass says merchant service companies should offer merchants several POS and processing system options to choose from.

3. Show your cards last
Some salespeople may ask to see your most recent merchant processing statement upfront so they can show you how much they'll save you.

Don't do it, Cohen advises. The sales rep will always crunch the numbers to beat your current rate.

Instead, give the sales reps your volume, average ticket or number of transactions, and then ask for their bottom-line price -- in writing. Once you get that information, you can decide if you want to share your statement and get a more detailed proposal from the processing company. 

4. Get it in writing
Did the sales rep promise you great processing terms or no cancellation fee if you want to end your contract? They may be empty promises. Under most contracts, processing companies can change the rates or add new fees simply by notifying merchants in a statement -- but that's often buried in a contract's back pages.

"Unless you have a statement, on the processor's letterhead, saying that there is no cancellation fee on the contract, you can't trust that [promise]," advises Cohen.  

If a sales rep tells you that the rate, basis points and cents per transaction will hold for the entire length of the contract, demand that assurance in writing as well, on company letterhead.

Any changes in the contract should be noted and initialed by both the merchant and the sales rep.

"Another mistake that many merchants make is that they don't keep their original contracts," Hass says. "Their reps or sales agents take the original signed paperwork and it goes back to headquarters; the deal is done, and the merchant doesn't ever get a copy of what was actually signed." 

That can be a huge problem because if you ever have a conflict, a problem with billing or an issue with an early termination fee, you need to be able to produce the original signed and notated contract.

5. Get good help
Both Cohen and Hass say that many processors' sales reps today may be undertrained and inexperienced. Some may provide merchants with incorrect information or leave out important information to close a sale; others simply may not know that what they are saying is not true.

Cohen suggests that one option is to hire a third-party expert that is not processor-specific to advise them on whether they are paying too much. These advisors can also help merchants find hidden fees on statements and contracts that they might otherwise not notice.

Hass recommends yet another type of help.

"Merchants should seek out veteran [sales agents] or someone with substantial experience in the industry to make sure that they're not being misled, that they're being told the right things and that there is no bad information being given to them," he says.

An experienced sales rep can help you make the right choices, he adds.

"It's our place to educate and empower the merchant to make the decision [about the right system] and to be the consultant who looks out for them for their future," Hass says. "We don't want to put them in a situation where their business outgrows their system."

See related: U.S. EMV rollout doesn't mean merchants have to rush, Walmart, Target reject Visa-MasterCard settlement. Should your business follow suit?

 

Published: September 19, 2012

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