Anthony Kutscher Universal Merchant Services ripoff lied about lease of equiptment, said the fee was not a lease but turned out to be one Total cost of lease was $12000 for equiptment worth only $1900 Costa Mesa California

Ken-

I work for a merchant processor and one thing I have found is that many of the "doorknockers" are actually not employees of merchant processing companies. You or I could search the internet and start our own merchant services company this afternoon if we wanted to. It is a good idea to make sure that you (or anyone else) are working with a reputable company that actually hires its own sales professionals.

As the thousands of complaints on this website and others would indicate, there are more scams, tricks and outright liars in this industry than any I have ever been involved in. Hopefully, the following facts and pointers will be of some use. I will continue to list them on postings similar to this one as long as this website allows.

First off, it is important to understand how credit card processing actually works. Visa and MasterCard, the card associations, receive the majority of the fees that merchants pay for their processing services. The remainder of the fees, or the margin, is what the merchant processor receives. The card associations have designated over 240 different card categories that each merchant processor must recognize and process. Every merchant processor, no matter how big or small, is charged the same rates and fees by the card associations and every merchant processor differentiates each card category utilizing exactly the same card category name as designated by the card associations.

The card categories are designated in the following manner:
1.)Industry Retail, Restaurant, Hotel, Government, Utility, Service Industry, Gas Station, Supermarket, etc.

2.)Type of Card Personal Visa or MasterCard, Visa or MasterCard Debit, Visa Rewards, MasterCard World, Commercial Visa, Corporate MasterCard, etc.

3.)Method of Processing Face-to-Face (swipe), Mail Order/Telephone Order, Key Entered, E-Commerce, etc.

4.)Processing Efficiency Address Verification, Authorization/Settle Match, Timeliness of Settlement, etc.

To be clear, all of these cards are charged their own specific interchange rates. This is where it can get a little murky. Most merchant processors only disclose their "discount" rates and charge an additional fee for Visa and MasterCard rewards and corporate cards as well as other specialty cards that your clientele will use. Be sure to get all of the info you need to make an informed decision. The rate on which you need to focus is the net effective rate.

To calculate your net effective rate, simply divide all the fees you are charged by your net credit card volume (sales less credits). Service providers typically charge an authorization and transaction fee, service fee and other miscellaneous fees in addition to a mark up on the interchange rate.

Do not be misled by focusing on one line item - if you are being told about one rate and one rate only, you are not getting all of the information. Make sure any processor that you work with is able to give you 15-20 different association categories and associated rates and fees.

Additionally, watch out for the following practices that have the effect of increasing your net effective rate:

Minimum and maximum monthly feesavoid them! Watch for annual as well as monthly minimum and maximum fees.
Make sure you pay fees based on net sales (sales - credits = net sales) not gross sales! Or worst yet, Gross Plus! You should get the interchange fee back if you have to issue a credit to your customer!
You should receive your money within two business days, no longer!
Are fees taken at month end or on each deposit? Fees taken daily increase accounting complexity and increase your cost of funds.
Watch for other miscellaneous fees such as batch fees.
Don't buy new equipment if it isn't justified.

Service:
Credit Card acceptance is a volume businessthe more you process, the less you should pay. However, without a reliable service provider, you can end up paying considerably more then you should. Again, ask yourself the following questions:

Who watches to ensure my transactions qualify for the best rate?
Am I assigned to a specific relationship person or the next available operator?
How do I know when my volume qualifies me for a lower fee?

Equipment costs:
Be careful about being sold new equipment. If you process low volumes you may not need a terminal. Your telephone can be used to process and settle your transactions. Make sure you are not buying a private label terminal. Some processors sell terminals that only work with their software or need special codes to be reprogrammed.

Leasing terminals for unreasonably high rates ($50 month and higher for three-four years) is another way unscrupulous providers can take advantage of unsuspecting business owners. The cost of the lease is almost always higher than buying the terminal. A business case may be made for new equipment if you do a lot of hand-keyed transactions and your current equipment is unable to submit all the data elements necessary to qualify for the lowest rate.

Contract Terms:
Be sure to look out for any minimum or maximum sales amounts.
Be aware that some vendors will try to lock you into long term processing contracts. This may be a good business practice if in return you are guaranteed their best price, with pricing changes tied directly to the published interchange rate, and you are pleased with the service from this company. Also be aware of the cost of terminating your relationship with a provider.

If you were to close the account, determine ahead of time what the closing fees will be. To be safe, NEVER sign a merchant agreement when there is a term commitment on the day you are presented the information. Give yourself a day or two. Once you sign, you're in for the term.

Good Luck!

Please give us a breakdown of the $273 a month. I've found that just about any company that has "merchant sevices" in their title is usually a ripoff. Thanks.