Businesses in need of credit card processors need to weigh their options carefully. The right payment processor is reliable and cost-effective, allowing customers to use their preferred methods of payment. In other words, the right service can keep your customers happy! The worst payment processors, however, can add considerable stress to your business and cost you more money out of pocket than you need to pay. Worse, these processors can even expose you to liability if they’re not secure, pushing your customers away. You’ve worked too hard building your business to tolerate such an issue. As you look for credit card processors, read the fine print and talk to other companies. In addition, be sure to avoid the following types of services.
1. The High Fee Chargers
The worst credit card processor is one that costs you money instead of partnering with you to help you earn more. Be wary of companies who are vague about costs, fees and charges or who don’t put everything in writing. Bad companies focus on nickel and diming you instead of treating you like the valued customer you are. Look closely, and you may find hidden charges, secret fees and unexpected costs you certainly did not agree to. Maybe you agreed to some pricing factors at the start, but they appear to be thrown out the window as your costs increase month after month — if that’s the case, you’re dealing with a high fee charger. Look out for companies that care only about the bottom line and are not completely transparent about precisely what you will pay for what. These companies will cost you extra and can push you into debt or severely hurt your cash flow. To avoid high fee chargers, always get all fees in writing and make sure you understand exactly when each service fee will be. Compare prices to find an affordable and transparent company you can trust.
2. Unsecure Companies
Make no mistake about it: If your customers’ personal data is compromised, your customers will look at you and hold you liable, even if the fault lies with your credit card processor. Your reputation and the well-being of your customers and company are stake, so find a processor who takes security seriously. Companies that are not secure are not PCI-compliant and are not familiar with the latest risks and the newest technology. Such businesses may not have a written policy regarding security. Insecure companies may put online transactions at risk, leading to potential breaches and loss of customer trust. They likely can’t answer your questions about compliance, security and what they are doing to keep your customers’ information secure. Avoid outdated credit card processors who do not have an audit strategy and have not gotten serious about hiring professionals to make their systems secure. Look for businesses with thoughtful and thorough security systems in place. Ask about security. A security-conscious company will be able to tell you that they’re PCI-compliant and will be happy to inform you about what they’re doing right now to keep customer data safe.
3. The Non-Negotiators
When you choose a credit card processing company, you want to get the best deal possible for your business. Though you’ll always need to pay your provider a percentage of sales and a fixed per transaction fee, your processing fees are up for negotiation — or at least they should be. Some companies charge high processing fees and expect customers to pay, even when lower-fee competitors come onto the market. This complacent approach to pricing leaves many customers paying too much for their transaction processing. When you work with a non-negotiator, you have two options. You can either continue paying a processing fee you have no say in or take your business to a different credit card processor. At Velocity Merchant Services, we employ a meet or beat policy to ensure you always benefit from the lowest processing fees. If you find a competitor that provides lower pricing, simply notify us in writing and we’ll match their price or give you one even lower. As a credit card processor open to negotiation, we’re able to offer the most competitive processing fees and spare businesses the hassle of switching providers.
4. Outsourcing Services
When something goes wrong, who can you call? Be wary of companies outsourcing support. When you have a question or concern for your payment processor, you don’t want to be sent away to a third party who does not know your business or even your credit card processor. Outsourced support services are a big concern because they indicate a company is happy to take your money but don’t want to be on-hand when there’s a worry. Outsourced support can also be frustrating. It can take longer to get answers because the outsourced company has to contact someone else, in many cases, to get the information you need. The bottom line is that you don’t want a middleman handling your worries. A service provider who outsources support is indicating that your satisfaction is not their concern, which is a troubling message. You deserve someone who stands by their services and is willing to make things right. When you’re looking for a payment processor, seek a company offering in-house support around the clock. Verify that the company’s own professionals are answering, not a third party. You might even want to phone support before you sign on, or ask other businesses in your field to determine what support with the company is like. Will you need to wait long to get answers? How satisfied are other clients? How long does a resolution take? What is the process of resolving an issue?
Red Flags in Credit Card Processing Contracts
When it comes to choosing a payment processor for your business, the details in your credit card processing contract can make all the difference between a smooth operation and a costly headache. Many merchants have learned the hard way that not all credit card processing companies are upfront about their terms, so it’s crucial to know what to look for before you sign on the dotted line.
One of the biggest red flags is a lack of transparency around fees and pricing. Some payment processors bury hidden fees in the fine print, making it difficult to understand the true cost of accepting card payments. These unexpected charges can quickly eat into your cash flow and make it hard to budget for monthly fees and transaction processing costs. Reputable companies like Velocity Merchant Services are clear about their pricing, so you always know what you’re paying for each transaction.
Early termination fees are another common pitfall, especially with some of the largest merchant account providers such as First Data, and understanding whether credit card processing cancellation fees can be waived is essential before you sign. These fees can make it expensive to switch providers if you find a better deal or need to change your payment processing setup. Always check your contract for any mention of early termination fees, and make sure you understand the process for giving written notice if you decide to move your merchant account elsewhere.
Watch out for contracts that include tiered pricing models. While these may seem straightforward at first, they often result in higher processing rates for certain types of transactions, such as online payments or mobile card readers. This can lead to unpredictable costs, especially if your business handles a variety of transaction types. Instead, look for card processing companies that offer transparent, interchange-plus pricing or programs like a cash discount program to cut processing fees, so you can clearly see the processing fee for each transaction.
Leasing companies can also pose a risk, particularly those that offer non-cancelable contracts for POS systems, cashless ATMs or point-of-banking terminals, or mobile card readers. Some of the worst rated leasing companies lock businesses into long-term agreements that are difficult and expensive to break, regardless of whether the equipment or service still meets your needs. Before agreeing to any lease, carefully review the terms and consider whether purchasing equipment outright might be a better option for your business in the long run.
Outsourced support services are another warning sign. If your payment processor relies on an outsourced company for customer support, you may find it difficult to get timely and knowledgeable help when you need it most. Reliable credit card processors invest in in-house support teams who understand your business and can resolve issues quickly, helping you stay focused on serving your customers.
Finally, be cautious of aggressive or misleading sales practices. Some card processing companies use high-pressure tactics or promise rates that seem too good to be true, only to lock you into contracts with hidden fees and unfavorable terms. Always take the time to read the contract thoroughly, ask questions, and seek references from other businesses who have experience with the provider.
To stay safe, do your homework before committing to any payment processing company, and review merchant services FAQs for small businesses so you understand what to expect. Compare pricing, review contract terms, and make sure the provider’s support and services align with your unique needs. By being vigilant and prioritizing transparency, competitive pricing, and excellent customer support, you can avoid the worst credit card processors and find a partner who will help your business thrive. Remember, the right payment processor is an investment in your business’s future—choose wisely to protect your money, your reputation, and your peace of mind.
The Bottom Line
The wrong payment processor can hurt your business, but there are great options out there for your company. Avoid businesses that want to take your money and show little interest in honesty, integrity and your success. The best credit card processors are those who will work with you in your business and grow with you as your size and success increases.
If you’re looking for a reliable, trustworthy, secure and high-quality payment processor, contact Velocity Merchant Services, a leading merchant services company for a free conversation about your needs. Ask about our EMV chip card terminals, industry-low prices, more than 26 years of experience and A+ Better Business Bureau rating.
