The rate that stole Christmas

How that great rate you were sold for merchant services is about to steal your Christmas, and other pending holiday disappointments.

Independent sales agents like to say they can offer you a “better” Discount Rate for merchant services. They want to know what your current rate is so they can win your business by offering you a slightly better one.

What they don’t want you to know is that pricing merchant services on the basis of discount rates is a sleight of hand that conceals the true cost of their service. They make shaving a few basis points off what you are currently paying seem like a good deal in hopes you won’t think about the fact that paying a percentage—however small—of each transaction that is processed means that every holiday season when your sales volume goes up, so does what you are paying for card processing.

It’s certainly a good deal for them: Your sales agent collects his or her percentage on every charge you process—for the life of your contract. That means a windfall profit every holiday at your expense. They don’t provide any more services. You just pay more for what you get.

By contrast, the direct model for merchant services let’s you keep more of your money. It charges a flat monthly management fee—based on the nature of your business—and that’s it. One of the ways the direct model works, in fact, is by cutting out the commissions that have been going to sales agents who actually don’t ever provide any service other than getting you to sign their contract…which is more of a “self-service,” when you think about it.

Don’t be fooled. Everyone has to pay the Interchange rates that are set up by the card associations, but you should never have to pay any other rates that increase in volume as you increase your sales.

Some other stocking stuffers that some merchant service providers try to give themselves for Christmas are passed off as “annual fees” that are charged in December or January. Ask your sales agents what they are for and you might hear something like: ”Ah, you know…ah…customer service, the cost of compliance, tech support, maintenance, supplies…you know…all the stuff we charged for last year. It’s, ah, you know, an annual fee…once a year.”

These are not good answers. If your merchant service provider wants to give you a good “rate” and an annual service doll for Christmas, do yourself a favor. Give yourself a new merchant service provider who delivers the service you need directly to you for a flat fee.

And have a happier holiday.


Stephen Erickson is CEO of EnablePay ( which embodies a new business model for merchant services that is based on delivering processing services directly to the merchant without depending on a network of independent sales agents. He can be reached at 1-866-509-1322.