Information on Merchant Accounts,
Ecommerce and Credit Card Processing

May 1st, 2006 by Jamie Estep

Finding a Bad Merchant Service Provider

Filed in: Ecommerce, Merchant Accounts, My Favorite Posts | 1 comment

Trust Me
There are so many merchant service providing companies in the US, that searching for a good one can seem like an overwhelming task. Nearly every provider you encounter will be offering their version (or the same version) of what they can do for your business. In the world of merchant services, there are a few good companies and there are a lot of bad companies. A bad company is what I would define as a company that is looking to rip off unsuspecting businesses. New business owners are often so busy planning the other parts of their business, they become an easy target.

How do you find out if the company that you are going to trust your money to is a good company?

First and foremost:
If you are new to merchant accounts and you hear the word lease, my recommendation is to run far, far away. Just to further explain this, get the lease cost information that you are being offered and the terminal they want to lease you. Then, enter it into our processing equipment lease cost calculator. You will see why I tell you to run.

Secondly, check for some simple information on the business. Look at the website and make sure you can find a physical address, and phone number. Next check the address in the Yellow Pages and make sure that the business does indeed exist where they say they do. Also, check to make sure that this isn’t a residential address. You would be amazed by how many claimed merchant service providers are actually people operating out of their basement.

Next, look at the legal disclaimer on the bottom of the website. Using my business as an example, it should say something like:
The Merchant Equipment Store is a registered service provider for the following FDIC-Insured Bank: HSBC Bank, USA, National Association, Buffalo, NY.

The penalties for incorrectly or illegally displaying this disclaimer are strict enough that they can destroy a small company in fines and legal fees. If the legal disclaimer says something like FDMS is registered to, or JP Morgan Chase is registered to, etc., the site is not legally registered with Visa and MasterCard. FDMS and JP Morgan Chase do not allow websites to use their disclaimer, nor do any other registered company.

If it lacks this information completely, or if the statement is for a different organization than the website name, the business is not operating legally, plain and simple. Find a new company.

Next you need to check the businesses profile with the BBB (Better Business Bureau). The great thing about the BBB is that they keep a profile for businesses that aren’t registered with them. This means that if the company has complaints against them, the BBB will let you know.


When looking at the BBB profile, there are a few things to remember. While its great if a company has no negative reports against them, the important thing to know is how the company handles complaints. Occasionally a customer can not be made happy no matter what is done, so as long as the company resolves their complaints as best a humanly possible, and there aren’t a ridiculous number of them, they are probably not a bad company. On the other hand if they have open complaints, or a huge quantity of complaints, they are a company you should probably stay away from.

Now that the company you are thinking about signing up with has checked out on being a legitimate, honest business, you need to get into the processing related questions. Look at these posts for specifics on fees and other factors to help you avoid getting ripped off.
What Does All This Mean? – Merchant Account Fees
Avoiding a Bad Merchant Service Provider

The key things to remember is that when you see things like free terminals, or greatly reduced fees over other companies, there is probably a reason for it. In a cost driven industry like credit card processing it is nearly impossible to get a much better deal with any particular company. Look for the best value when you shop for merchant services. The company that can provide you with reasonable priced equipment and fees, while giving you the support you need is a good find. Hopefully you never have problems with your credit card processing but if you do, you will be glad to be with a company that fixes the problem, quickly.

This is your money, don’t trust it to just anyone.

One Response to “Finding a Bad Merchant Service Provider”

  1. Paul Burt October 10, 2008 at 3:19 pm

    I’m a little weary of the information here since in 2 years thei are no comments. But I am interested in doing some fact check. Most sites for providers I see list FDMS, Chase Payment tech..ets as an ISO/MSP. These companies are registered with Visa. With so many companies listing this on their web site is their an old regulation that the banks are no limiting. 2nd I noticed you mentioned the leases are always bad, but the companies with leases seem to have lower interest rates. Even with the lease the end amount seems to be lower. The sales people for either tend to be pushy, but I’m trying to find whats best for my business.