I have a friend who’s a merchant account underwriter with a major bank, and whenever we speak about merchant accounts it amazes me. The agreements are as complicated as a mortgage to understand, and virtually everyone he speaks with thinks they’re getting a low rate but are usually getting rooked.What typically happens is they give a teaser rate which is low, but it only lasts six months or a year before your much higher discount rates kick in, and people never realize it.

It’s like an adjustable mortgage, only the merchant account rep usually won’t tell you that your rate will go significantly higher when the introductory rate expires. Have you ever wondered how they can say ” low 2% rate” in an ad before they even see your credit, know what you’re average ticket price is, or volume will be? That’s the reason, because it’s always a teaser rate to get you signed up.

Another huge problem is if you’re not signed up with an underwriter, you’re guaranteed to be paying too much in fees. An underwriter writes merchant accounts directly with the bank, and when you sign up with a middleman 2 or 3 levels down they all get their basis points on your sales so you have to pay higher fees. You per transaction fees aren’t safe either. They go up after an intro rate expires, so instead of .25 cents per transaction it can shoot up to a dollar or more. For a store with a low average ticket price and lots of transactions, this can be several hundred dollars a month easily.

The real reason why this is so prevalent is because there’s so few underwriters. Most merchant account companies and reps can’t get through the extensive background check, so they have to exist further down the food chain and charge higher rates to make their commissions.

When you go through a true underwriter what you will get is a REAL fixed discount rate that is locked in  the day you sign up. A single 25 cent debit card transaction fee with absolutely no discount rate whatsoever, and a single eight cent credit card transaction fee for your true credit cards like MasterCard & Visa.

With over 12 million merchant accounts out there, it just blows me away the amount of money being spent on these inflated fees, and most business owners aren’t even aware of it. If you have a merchant account and want someone to decipher what you’re really paying, and how much lower it can go when you’re having payments processed by an underwriting bank instead of middlemen, call MST at 800-715-8053 and he’ll be happy to give you a free consultation. They also have an SSL secure form available here if you’d rather contact them online.

Nick