Okay, so you've filled out a couple of applications and hopefully someone has called you to discuss your business. Keep in mind that merchant service providers make their money a couple of different ways:

• 1. Acquisition of account, i.e. set up and application fees.
• 2. Sale of processing software/hardware or virtual terminal.
• 3. Some may share in the revenue produced monthly by your processing fees.

The bottom-line? Most of the money is made up front, especially for the person selling you the solution. Again, there may be high-pressure sales tactics used. So when you speak with a representative of the provider, the following are things they don't want you to know:

• 1. There is a monthly minimum-processing fee that you must pay.
• 2. The bank fees cannot be waived.
• 3. You may be required to pay a reserve, either by giving up 5-20% of each sale or paying cash to the bank. The reserve is typically 33-50% of your monthly volume.
• 4. Your credit affects whether you are required to pay a reserve, put up cash or even get the merchant account.
• 5. Your credit history cannot increase your gateway fee, transaction fee, or discount rate. If your rep tells you differently, keep shopping.
• 6. The refundable deposit is refundable only if the bank declines you, not if you decline because you no longer want to go through with it.

Why wouldn't you want to go through with it? Although you've done all the research, the following are a few suggestions to take into consideration before signing the paperwork:

• 1. Quoted rates are often based on a question answer formula. When you have signed your application and it is forwarded to the bank, the fees change based on your credit history.
• 2. When you lease your software/hardware or virtual terminal, the monthly fee may change as a result of an actual credit review.
• 3. A reserve is required.

• 1. A card from outside of the processor's country results in what is called a non-qualified rate, a whopping 3.75% of the sale.
• 2. Processing more than your limit, resulting in held funds. The length of time the funds are held depends on the risk factor and the bank with which you deal.
• 3. If you don't batch out every day, you pay additional discount fees.
• 4. Should you surpass the limit that the bank is willing to allow for more than three months, you may receive an immediate termination letter.
• 5. If you receive more than 3% in chargebacks, your bank may terminate the account, at which time you will find it very difficult to get another one.

Lastly, many of the representatives on the Internet work from home and may not have the resources to deal with issues that may arise. Thus, service isn't the best. As you can see, you really need to do your homework. Make sure to get all of your questions answered and of course, buyer beware.

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