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Stop Playing The “Shell Game” When Shopping For Merchant Services!

June 22nd, 2011

***The shell game (also known as Thimblerig, Three shells and a pea, the old army game) is portrayed as a gambling game, but in reality, when a wager for money is made, it is a confidence trick used to perpetrate fraud. In confidence trick slang, this swindle is referred to as a short-con because it is quick and easy to pull off. – Wikipedia***

I remember my first time in New Orleans. I was coming back from a casino with a few extra dollars in my pocket and a few drinks in my belly when I walked past a compelling young man with a make-shift, cardboard box table top set up just around the corner from a Lucky Dog cart. I had to stop. I watched as his hands and words went into rhythm. He covered a blueberry-sized foam ball with a Dixie cup, moving the cup in and out, around and back, among two other cups, mixing them up thoroughly. As I watched he invited me to pick the cup that concealed the ball. Guess what? I nailed it- on the first try!

Flush with my success and lured by Big Easy banter, I was happy to lay out $20 that the operator promised to match when I made another correct pick. But I didn’t make another correct pick. And it wasn’t that my ability to watch his hands had gotten worse. I was experiencing a sleight-of-hand trick. The ball wasn’t under any of the cups. I had no chance to get it right. It was in his palm of course. I laughed at his cleverness, considered the $20 a well-spent tip for entertainment, and wobbled back to the hotel.

But what about those of us in the business world who are playing this type of game with a genuine expectation to come out on top? Unfortunately, there are thousands of small business owners making frivolous moves with the life-blood of their businesses every day when they jump from credit card processor to credit card processor just trying to save a buck.

First, let me say that I understand the temptation. Who doesn’t want to get the best business services at the best price? But many of the price comparison techniques we see these days often result in a lateral move at best and bait-and-switch scenario at worst.

Second, the simple fact is all direct processors and resellers basically work off the SAME wholesale costs – interchange. So it comes down to how much the provider is willing to give away for the business. Today with competition more stringent than ever and merchants savvier than ever, merchant service fees should be very comparable among the vast majority of providers. The problem is that salespeople approaching merchants are often performing sleight-of-hand tricks to show significant savings where they do not exist.

Here’s how it works: Providers reduce one fee or set of fees (such as the base discount rate) only to recover that loss in other ancillary fees such as surcharges, monthly fees, per item fees, statement fees, PCI compliance fees, annual fees, and on and on and on. What’s worse, many of these “lower processing rates” are “locked in” with contracts so tricky and expensive to get out of, that for some merchants, it is cheaper to continue to over pay than move to a less expensive provider.

What is a business owner to do?

Once you have gone through the process to find a provider you like, that keeps promises, and addresses your questions and service issues properly, stick with them. Of course keep an eye on your statement for anything out of the ordinary, but if they are a serious about maintaining a business relationship with you, you are likely to get periodic (semi-annual, annual) communications from them. Just like everything else, processing costs increase from time to time, so don’t immediately take a small price increase as a gouge. Again, communicate. Know that you are comfortable with your provider and save yourself the time and agony of playing the “shell game”.

So the next time you get an enticing phone call, email, or a personal visit from a sales rep claiming to “save you money”, you can have the peace of mind knowing you are already in a relationship that is as good as it gets. Instead of trying to chase the pennies related to your Merchant Service fees, spend your time and energy acquiring new business. You will be happier and your business will be healthier.

Stay tuned for information on how to choose the right processor for good so you don’t have to play the game anymore.

Thanks for reading. See you next time.

Entry Filed under: Advice

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