We’ll reveal some of the tricks and tactics big payment processors use to make more money off small businesses so that you can avoid getting ripped off with paying too much for payment processing.
We naturally feel more comfortable and confident with those we know. Whether it’s a friend, a neighbor, or even a company logo–familiarity can build trust.
This is why large companies spend billions on advertising each year: the more a person is familiar with a company, the more likely they are to use it.
But just because a company is well-known doesn’t mean they deserve your trust.
This is especially the case with large payment processors, as you’ll see in this article. Learn how these big, well-established companies take advantage of small businesses and what you can do to avoid their greedy tactics.
Selling unnecessary equipment with proprietary software
The first on our list of how big processors take advantage of small businesses is connected to the equipment they offer their clients.
What do you think? Should a person who bought something be able to do what they want with it? Clearly, many payment processors don’t think so. How do we know?
Because the software doesn’t work with anyone else, even though the equipment belongs to the customer. This renders it useless unless the customer uses that particular payment processor. If that customer wants to go to someone else, they now have a very expensive paperweight.
For example, just look at what happens when a certain major payment processor sells their proprietary Clover machine to a business. If that business wants to use their machine to process payments with someone else, they simply cannot. Why not?
You guessed it: that major payment processor owns the software on that machine. It’s locked to them, even though they’re completely able to unlock the software. To make more money, they won’t let another (less expensive) processor start accepting payments on that equipment.
Does that seem reasonable to you? We don’t think so either. It’s sneaky tactics like this that makes us at Progressive Payment Solutions mad to see small businesses being taken advantage of. Plus, it gives honest payment processors like us a bad name.
But that’s not all. Find out what other greedy tactics major payment providers are responsible for.
Leasing equipment to make more money
Big payment processors know how much equipment actually costs—after all, they’re among those buying it directly from manufacturers. How do they use this pricing information?
To make more money off of their customers, of course. They prefer customers to lease their equipment because they will pay more for it in the long run.
The fact is, it’s cheaper for the customer to purchase their credit card processing equipment outright. But if the processor can get that customer to continue to pay for it over time instead of a lump sum right away, they will actually pay for their equipment many times over.
This is exactly why every business should purchase their equipment outright. And it’s also one reason long contracts should be avoided—after all, no contract=no long-term leased equipment.
Don’t be fooled by “free” equipment either. This is something we addressed in our blog on what to know about choosing credit card processing equipment. After all, you’re going to be paying for this supposedly “free” equipment with hidden fees elsewhere.
Why else should businesses avoid extended contracts with payment processors? We’ll examine that next.
Hidden fees
Imagine needing an interpreter to do a business deal. How important would it be to have a trustworthy interpreter in this situation? Now imagine you hear that large interpreter companies are known for cheating their clients by using confusing language that their clients don’t understand to make money off of them.
That’s pretty much what happens with large payment processors: they know how difficult it is for small businesses to understand their contracts, allowing them to take advantage of their customers.
They can use language, codes, or other terms that only someone in the payment processing industry is able to decipher, letting them hide sneaky fees that seem legitimate.
For example, a common fake fee is sometimes called an “adjustment fee”. This fee is meaningless; it is literally just a way to charge clients more money; no more, no less.
Keep in mind that these contracts are not just a page or two; instead, they can be dozens of pages long, with wording and terms that most people can’t discern or don’t have time to look up. Thus, fee after fee can be woven in among the thousands of lines on the contract.
What else should you look out for with contracts? Keep reading to find out.
Extended or tricky contracts
It’s not just hidden fees in contracts that businesses have to worry about. There’s also costs that come from being locked into a long, expensive contract.
And should the client want to get out from these contracts, they can be in for a rude awakening: fees such as Early Termination Fees (ETFs) are waiting for them, which can range from $50 to several thousands of dollars.
To make the situation financially worse, there are also auto renewals that require a phone call to a specific number before a certain time to get out of the contract.
Imagine: right when the client thinks they’re free from their expensive contract, they receive a notice that the contract auto-renewed for three more years–with a rate increase each year. Large providers are notorious for this.
This is something we’ve touched on in our blog about what to avoid in a credit card processing contract. Make sure to read this before you sign a contract with any payment processor.
Lastly, find out why a lack of customer service from big payment processors impacts small businesses.
Lack of customer service
Some questions need immediate answers to keep a business running. So picture the frustration from spending an entire afternoon trying to get an answer to a payment processing question, only to be transferred to five different lines where you’re placed on hold at each one of them.
The sad reality is that large payment processors don’t place a priority on customer service simply because the customer has already paid at this point. Thus, the big processor doesn’t have a financial motive to respond quickly to problems or answer questions.
What your business can do about it
Sometimes it’s safer to go with a well-known brand. However, that’s not the case with payment processors.
As we’ve seen, big payment processors are notorious for slipping in hidden fees, charging too much, and providing the bare-minimum customer service.
When it comes to payment processing, go with a smaller company.
Smaller payment processors are known for:
- Being accountable to the customer
- Straight-forward in their contracts
- Offering equipment at-cost with upfront pricing
- Providing responsive, personalized customer service.
Progressive Payment Solutions is a local, family-owned processor that has a stellar reputation. Schedule a call with us today and find out for yourself.
Summary
While larger processing companies are more recognizable, they are almost always the culprits for taking advantage of their clients with greedy, deceitful tactics to charge them more.
Big payment processors charge hidden fees, make the customer pay too much for equipment that’s locked only to them, and have drawn-out, expensive contracts that auto-renew.
All of these things can be avoided when you partner with a company like Progressive Payment Solutions: no hidden fees, no auto-renewals, no price gouging for equipment–just the best rates, equipment, and service. Period.
Contact us today to pay the lowest processing rates on a contract you can end whenever you want.