CBC released an article on some of the nightmares that small businesses have experienced by switching to less-than-honest payment processor competitors.
Our payment processing industry is notorious for hidden fees and bad sales practices, and the cost of going with a bad processor can be high for any business. This CBC article reveals horror stories from real Canadian businesses about how they were ripped off from their processor.
Businesses Hit by Hidden Fees from Credit Card Machines: Our Insights
The article begins with an investigation of a handful of Canadian business owners who reported that their processor had charged them magnitudes more than what they thought they were going to pay. Usually, these extra charges are brought on by deceiving salesmen who use misleading sales practices, or companies that use contracts with hidden charges embedded in thousands of words of legal text. One tax preparer from Winnipeg reports that her credit card processor stole almost $1,800 from her in the first month. She says that it started with just a couple of extra fees and they started to pile up. This practice is used by some credit card processors to 'snowball' the fees. Some of these charges go unnoticed, which is unfortunate for business owners as they might not even know they are getting duped. Deceiving credit card processors will take your money and apologize later, but you can't do anything if you are locked in a long-term contract with them.
The CBC found that the businesses they interviewed also had problems with bad contracts. The issue here is that the salesman makes false promises with processing fees and mislead the business owner to believe that he is paying a certain amount when the contract says a completely different amount. When entering a credit card processing contract, it is imperative that you research the company, talk to multiple sales or support agents, and read the contract extremely carefully.
On a positive note, if you are locked in a bad contract there a few things your business may be able to do to get out of it.
Furthermore, Helcim Would Like to Give You Three Tips on Avoiding Future Deceipt With a Credit Card Processor:
1. Watch Out for Equipment Leasing:
Expensive long-term equipment leasing agreements are a common way of keeping small businesses locked into payment processing agreements as breaking the lease can lead to a large fine. Small business owner Glenda Legadi was out almost $1,800 after only 6 months when she was tricked into an equipment lease.
2. Beware of Transactions Fees "As-Low-As":
Although many payment processors promise a low rate, only a small percentage of customer cards fall into this rate structure. In this story, sales reps came on location and promised lower rates. Unfortunately, later on, when the monthly statement came in, it showed hidden fees and undisclosed rates that added up to huge amounts. Helcim is actually the only Canadian processor to display a full list of processing rates.
3. Never Sign Incomplete Paperwork:
In one Canadian business owner's story, payment processors used incomplete paperwork to add in additional rates. The woman here was told to fill out an incomplete application, and the rep added the extra rates later. Make sure you are dealing with a finalized contract agreement.
The payment processing industry lacks regulations, so there are many less than honest tactics that sales reps can use. As a small business owner, you do have a choice in who you do business with, and you can work with honest, transparent business partners.