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Merchant Accounts
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 the category.

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 risk.

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.

About the Author
A Word About Our Membership Community
Frank Merchant knows how to get the best price
The Internet Marketplace
What are the advantages (and disadvantages) of accepting credit cards for your business?
6 Benefits of Accepting Credit Cards
Disadvantages of Accepting Credit and Debit Cards
Who are the players? How does the money get in your bank account?
Credit Card Transactions Step By Step
Should I go visit my banker for my merchant account?
How can I tell if I will get good customer service?
Be on the Lookout for Deceptive Sales Practices
How to Avoid Your Money Being Held By Your Non-Cash Transaction Processing Company
Banking Terms You Need To Know
Benefits of Debit as a Payment Option
What You Need To Know About Leasing a Credit Card Terminal
Fraud Protection 101
Cardholder Security: Avoid Monthly Fees, Fines, and Penalties What Is PCI Compliance (PCI DSS)?
Four Key Components to Conduct eCommerce Successfully: What They Are, and How They Work
Web Site
Your Merchant Account
Secure Payment Gateway / Payment Transaction Software
Shopping Cart and Catalog
Should I use a third party processor like PayPal?
Quick Summary of Costs
Detailed Summary of Setup Fees, Recurring Fees, and Risk Estimate
Total Risk Estimate (TRE)
Total Risk Estimate Worksheet (Low-Medium-High)
Are you being stung with "Non-Qual" fees for keyed orders?
Have You Ever Felt Betrayed By Your Credit Card Processing Company?
Your Customers' Credit Card Numbers at Risk
Visa: Heartland, RBS WorldPay no longer PCI compliant
Marketing 101: Gift and Loyalty Smart Card Technology Ensures Customer Loyalty
Check Warranty and Check Acceptance Policies
How Can I Prevent Credit Card Fraud?
Identity Theft
Merchant Account Comparison Worksheet
Credit Card Terminal
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