The third and most overlooked area
is the Total Risk Estimate (TRE), which is a composite
of eight key indicators of risk. The TRE will help you
estimate your opportunity costs and hidden fees after
the sale. The Opportunity Cost is the revenue you
give-up when distracted by operational problems or bad
customer support. Hidden Fees are surprise payments
that show up on your monthly statement. As you could imagine,
if your opportunity costs and hidden fees are high it
could truly harm your business.
Many times Merchants call around for rates and fees from
a variety of different Merchant Account Providers. Using
the spreadsheet following this section you can both apply
a rating to each company you talk to (Low, Medium, or
High) - AND apply a weight to how valuable each of the
below indicators of risk is to YOU. Review the example
below and then take a look at the Appendix - "Merchant
Account Comparison Worksheet". I have included extra worksheets
for you to do your own cost benefit analysis.
Here is a summary of the 8-Point Rating you can use
to determine your Total Risk Estimate (TRE):
1. Knowledge Level of Salesperson - Is the Salesperson
competent in answering your questions?Does the Salesperson
respond to your enquires in a timely way? Again, this
may - or may not - be important to you. Go to Appendix
A and "weigh" how important this is to you and then rate
2. Ease of Application Process - Merchant Account
Applications can take days and even weeks to get approved
-and with extensive paperwork and financial statement
submission requirements. Ask your Merchant Account Provider
the tough questions on how long the process will take
and what documentation they will need. Do not be led down
the path. The entire process should take from a few hours
to no more than a week and without much paperwork hassle.
3. Merchant Account Provider Years in Business and
Industry Recognition - Has the Merchant Account Provider
been around for some time or are they a new ISO?Can the
Merchant Account Provider representative or salesperson
share with you any industry recognition that the Provider
has been given. Can they send you testimonials? These
are indicators of a quality Provider. The fewer the years
and lack of testimonials or recognition the higher the
4. Acquiring Processor Years in Business and Relationship
with Provider - Who's the Acquirer behind the Merchant
Account Provider and what relationship do they have to
the Merchant Account Provider?The stronger the relationship
and the greater the number of years the Acquiring Processor
has been processing for Merchant Account Provider the
better. Over 10 years is rare. The looser the relationship
and the lower the years - the higher the risk.
5. 100% Money Back Guarantee - A few reputable
providers will offer 100% Money Back Guarantees on any
upfront investment you make. Beware of Merchant Account
Providers who do not offer this. If their service is so
good, why can't they back it up with a guarantee?
6. Single Point of Contact - When diagnosing an
authorization or settlement problem, your valuable time
is at risk. If you have a separate (where applicable)
equipment servicing source, tech support department for
your software, Gateway Provider, and Merchant Account
Provider, you may have to call any or all of them separately
to resolve the transaction problem. Rest assured, this
can result in one servicing or tech-support company pointing
fingers at another to get you off the phone. Try to get
as many service sources under one roof.Make sure most
transaction problems can be resolved by calling one toll
free phone number. This lowers your time risk. What about
security? Does the Merchant Account Provider have dedicated
loss prevention and chargeback departments or are these
services subcontracted out? This can help protect your
account from fraud.
7. Bundled Solutions with a Full Service Provider -
A Merchant Account Provider should be a full service,
long term, relationship with your business. Does the Merchant
Account Provider just offer bargain basement pricing for
internet businesses and has nothing to do with the brick
and mortar category of business - or are they educating
you to other profit centers and marketing techniques for
all types of businesses. There may be new technologies
and ideas that you haven't thought of. Is the zero discount
fees available to you by your accepting debit cards discussed?
What about gift and loyalty at minimum replacing your
paper gift certificates? What about check warranty services?Phone
cards as an add-on profit center? Internet solutions?
Are you offered incentives for adding ancillary services?
Remember, business owners have likelihood of opening
and purchasing other businesses as the years go on. A
proven credit card processor should have merchant customers
in a variety of business environments, not just the Internet.
Look for a processor that serves retail businesses, internet
businesses, mail order/telephone order businesses, home-based
businesses, business-to-business merchants, businesses
referred by their banks, associations and franchises,
professional services (e.g., physicians, attorneys, chiropractors,
etc.) and wholesale businesses. This versatility ensures
that your processor has the experience to transact your
processing accurately and effectively even as you get
involved in other business types.
8. True 24 x 7 Service and Tech Support From One Toll
Free Number - Murphy's Law states "if something can
go wrong it will". That means you need tech support on
nights and weekends. Anything less this means higher risk.
Call the customer service line at least once at various
times including weekends to see if the number is both
toll free and without exorbitant hold times.