5 Common Misconceptions About Merchant Processors

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A man paying for his food with a credit card

Merchant processors and accounts are still new to many people, and since this is still a budding field, many prospective clients are often discouraged from availing these services due to some baseless but popular misconceptions. Let’s look at some of them.

1. Card Processing Is Done By the Bank

One of the most popular and easily trusted misconceptions regarding credit card processors is that card processing is exclusive to banks. While this is true to an extent, not many people realize that the client chooses who he or she wants to process their transactions. Banks are notorious for charging exorbitant fees for payment transactions, which is why many people opt for much cheaper, third party options that they find relatively more affordable. So, it is best to research your options before signing a contract with your bank and do not fall for such myths.

2. Companies Offering a Low Processing Rate Are Better

Remember the age-old phrase, never judge a book by its cover? There is nothing more apt for this misconception than this saying. Although, in most cases, it is true that the service providers with the lowest rates often offer the best services, but this is not just entirely based on their rates. There are numerous different factors that play very important roles in establishing a merchant provider’s reputation and service benchmark.

These include software and hardware compatibility, services, processing rates, processing times, currency options offered, etc. Therefore, before finalizing on your payment processors, ensure that you have researched all the aspects of the company and are not just depending on their processing rates.

3. The Fee for a Credit and Debit Card Is the Same

Yet another common misconception. Credit cards and debit cards are processed differently, which is why their processing rates also vary. Credit card transactions are mostly higher in cost than debit card payments. However, there is a catch here. Since many merchants prefer that their clients use a debit card for transactions instead of credit cards, banks restrict the number of debit card transactions using limitations. This leaves the business owners with no other option but to pay the credit card fees for the remaining transactions.

4. All Merchant Service Providers Offer the Same Basic Services

This is not true at all. Each service provider offers a set of unique services, benefits and facilities for its clients in order to set itself apart from all the other merchant services providers. Although the initial setting-up procedure is the same with most banks, they offer certain services exclusive to their brand.

For instance, the cash withdrawal and transaction limits vary from bank to bank. Similarly, the number of debit card transactions also depends on each bank’s own regulations. Other differentiating services include loans, payment installments, loyalty programs, etc.

5. Once the Contract Is Signed, Service Providers Cannot Be Changed

This heavily depends on your case and reasons for switching. The merchant service provider you are currently with can negotiate terms with you, or the provider you are looking to sign with can offer to buy out your contract. However, this does not, in any case, mean that you are restricted to the provider you signed your contract with. You can switch whenever you find a better deal or service provider, with no strings attached.

These are just a few misconceptions that people often hear that misguidedly warps their view of merchant accounts and payment processors. Hopefully, this article will help you better understand the ins and outs of merchant processing, and maybe you can strike a better deal with your service provider.