Once upon a time, the only option available for credit card payment processing was to obtain a merchant account through a merchant services provider. The proliferation of smartphone card readers and other alternatives for processing payments make it possible for small merchants to process these payments without much up-front investment.
Unfortunately, that isn’t always the best decision. In fact, there are a few very valid reasons you might want to think twice before signing on with one of these third-party processors.
At the very least, the equipment may be insufficient for your needs. For instance, some third-party payment processors offer equipment with very little flexibility. Some of them require complex inputs to manage sales and can take an excessive amount of time to set up and manage.
You might even find you’re limited to the types of devices you can use them with. For instance, Square is not supported by Blackberry or Windows phones.
Some merchant accounts charge monthly and/or transactional fees for credit card processing. Many DIY processing solutions charge a percentage of each sale. The combination of these fees with additional fees credit card companies themselves charge may cost more than it would cost to have opened a merchant account with a processor to begin with.
Some even charge prohibitive equipment or setup fees along with substantial cancellation fees, effectively locking you into a contract that might not be cost-effective over the long-term. Before you decide one of these services is the right move for you, take your time and do a little math magic of your own to see how much you really stand to pay.
Little Support, If Any
Lack of support is among the biggest complaints retailers have when it comes to third-party payment processors. This is especially the case if you’re operating in an area with poor cellular or Wi-Fi coverage when trying to accept the transaction.
It also may be more difficult to connect with support representatives with these companies than with traditional payment processors. This could leave you losing valuable time researching and solving the problem when you can’t wait for customer service to become available.
Most reputable merchant services providers will assign you a dedicated representative to help with all your needs and provide you with personalized attention when problems arise.
Potential Security Risks
Security is a big deal with large and small businesses alike. It’s an even bigger deal with your customers. Unfortunately, third-party processors are perceived to have greater risks of being hacked and therefore deemed less trustworthy among many consumers.
Combine that with smartphone apps being extremely vulnerable to outside attacks and the risks of using outdated equipment that could mean you’re held liable if a security breach occurs. It’s a huge risk for your business to take. One that could cripple your business if a breach occurs.
Third-party processors have even less tolerance than some of the most selective merchant services providers when it comes to throwing up red flags that could cost your organization a great deal of money or time, while they verify purchases that make them a little uneasy. This could be things like:
- Unusually busy months
- Large dollar amount purchases
- Any other “red flag” events
Merchant accounts typically offer a little more stability and reliability in the services they provide.
Strictly Prohibit High-Risk Businesses
Believe it or not, third-party vendors are extremely risk-averse. They are not interested in working with vendors in industries generally deemed as high risk. Even if they initially approve your business, they can and often will terminate your service.
The vetting process is not intensive. In fact, they are far more likely to deliver an initial approval followed by a termination at a later date. Which can leave you hurting as you scramble to seek out other payment processing alternatives.
Contact Zenti Services before you commit to doing business with a third-party payment processor. You’ll enjoy free equipment and month-to-month agreements without any long-term contracts. We’re confident that you’ll find our qualification process, payment terms, and transparency a welcome change from many of the processors you’ve considered in the past and to the third-party processors you may be considering at present.