How to Make Sure You Aren’t Paying Too Much for Merchant Services
Merchant account services are a great thing for small businesses that are looking to grow their operations and need financing to do so. In fact, more than 80% of small businesses today report taking advantage of merchant services in order to expand and build their business without racking up massive amounts of credit card debt.
However, not all merchant services companies are equal — and what may seem like the best merchant services provider could be charging you way too much for your capital advance.
To be sure you won’t end up overpaying for small business merchant services, follow these three tips:
Keep an eye out for hidden fees and charges
When it comes to merchant services, you should always take the extra time to read the fine print. Some less-than-reputable merchant services companies are prone to tacking on extra unnecessary fees to squeeze more money out of businesses. Things like application fees, processing fees, annual fees, IRS fees, monthly minimums and other types of fees are absolutely not necessary for a merchant service to provide a small business with a cash advance. The best merchant services companies won’t charge any extra fees like these.
Understand the terms of your contract
Like with any contract, it’s important to know if, when and how you can back out if you need to. Before signing anything, be sure you thoroughly understand your merchant service provider’s cancellation policy and check to see if there are any fees for early termination.
Choose the rate that fits your business’ needs
Never accept any merchant service plan without fully understanding the plan’s terms for repayment. Because small businesses repay merchant services with an agreed-upon percentage of the business’ credit card transactions each month, businesses can choose pretty much any amount they want to pay back. What’s important is knowing how much the merchant services’ markup rate will be — typically, you can expect markup rates of 0.1% to 0.3%. Be sure you can afford whatever repayment plan you choose.
Do you agree with these pointers for avoiding overpaying for merchant cash advances? Feel free to share your thoughts or to ask any questions you may have about merchant services companies by leaving a comment below.