After being in this industry for over 7 years, we at The OGroup, Inc. have witnessed first hand just how notoriously shady the credit card processing industry can be.  From half truths, to hidden fees and even straight out lies, it seems that sales reps from credit card processing companies will do anything just to get small business owners to sign on the dotted line.  Any business owner that is familiar with the in's and out's of this industry is every shady credit card processors nightmare.  A few key points, like these listed below, can help immensely as you take control of your credit card processing expenses.  

                                                  The Top 3 Lies of Credit Card Processing
1. One Low Rate
Lie - More often than not when a payment processing sales rep pitches their services they only quote one rate that may sound something like 1.29%.  This leads the business owner to believe that this is the only rate that will ever be charged for all payment processing services. 

Fact - That 1.29% quoted rate is more than likely the first of three to four other rates that a processor will slip into a contract without you knowing.  It's called the tiered pricing structure; an opaque method of processing credit cards that can be manipulated with all types of hidden percentage rates and junk fees. The example quote of 1.29% s probably what the processor will charge for every debit card you swipe, but what about regular credit cards or reward card?  Be assured, those cards WILL be processed with other, inflated rates.  The tactic is to simply get the business owner in the door with the lowest rate, they fail to leave out that this is just the beginning.  These other rates, undisclosed but very real, are applied depending on the types of cards and how those cards are accepted. For example, a corporate credit card will always be charged a higher rate than a personal debit card; therefore there will never be one rate for all payment processing services.  Our best advice: Find a Cost Plus Pricing Structure with a flat fee for processing.  This pricing method allows you to pay straight interchange (rock bottom cost) and you will always know your processors profit margin.  Cost Plus pricing methods are the most transparent way to pay for credit card processing today and it's what we recommend until something better comes out.
 
2. “Free” Equipment
Lie - Payment processing companies will tell business owners that they will give them card swiping equipment for “free” when they switch to their processing services. They will often make this equipment appear to be worth hundreds if not thousands of dollars to make it look like they are giving the business owner a great deal.

Fact - Most things in this world are seldom free.  The reality is, most card swiping equipment can be found at relatively inexpensive prices.  Because of high and undisclosed processing rates, hidden fees, and junk fees, many small businesses end up paying for their equipment many times over throughout the term of their contract.  Leasing equipment can be a pitfall as well simply because it is just one more way that a processor can bind you to their expensive services Our best advice: After finding a processor that best fits the needs of your business, secure your own, reliable equipment for that will be compatible with your processors software.  

3. Junk Fees
Lie - Extra Fees such as statement fees, data security fees, batch header fees, monthly minimum fees, and a host of other hidden fees are necessary administrative costs to keep payment processing services operating.

Truth -  There are costs to maintain processing services, however, the majority of hidden fees out there are typically never disclosed by sales reps. These fees are honestly junk fees that are simply lining someones pocket and further cutting into the business owners profits.  Take a look at your last statement and scrutinize every charge you see on it.  Our best advice: If you're unsure what a charge is for, ask your processor directly.  If they give you the classic run around, give us a call.  We'll analyze your statement for free and let you know just how much "junk" is really in there.

                                                                             What do you think?
Do you feel you may have personally experienced one or more of these lies as a small business owner?  
Share your experiences or comments below.