All The Merchant Account Myths You Need to Know

Being in business for so long and helping thousands upon thousands of merchants, we’ve heard it all. Sadly, we’ve frequently heard of some very unfortunate cases with merchants on their past experiences. Locked contracts. Early termination fees. Hidden fees. The ugly stuff. We’ve seen providers quote one price and charge the merchant a totally different price even! The worst part? The merchant was locked in the contract. What do you think they did AS SOON as their annual contract ended? The looked elsewhere.

Merchant Account Myths #1 – I Don’t Need To Read The Fine Print

Because of these shady business tactics, many new merchants end up feeling that all processing solutions are equal. The truth is, they’re not. The proof is in the details.

Just because an account rep at a provider quotes you one price doesn’t necessarily mean the contract will reflect that price. You’ll want to review the details with your account rep. If they show any sign of being annoyed at your thoroughness, run!

Our advice? Read the fine print before you commit. It’ll save you the headache in the long run. Turns out one of the biggest merchant myths we’ve seen involves merchants thinking they don’t have to dig into the fine print.

Have you ever experienced these types of shady business practices? If so, comment below and let us know how you overcame the experience? Maybe you’re in the middle of it right now! If so, you’re not alone. Total-Apps is here to help!

Merchant Account Myths #2 – I Have to Physically Go To My Bank to Open a Merchant Account

When it’s time to open a merchant account for your business, your first instinct may be head on down to the local branch of your personal bank. The truth is, you may want to put some thought into this.

Just because a bank carries a well-known name doesn’t mean you’re going to get the best deal. In fact, this will likely never be the case. Major banks carry a ton of overhead cost, and given their popularity, they can get away with charging a higher fee. The reality is, third-party ISOs typically have multiple relationships, ensuring that you receive the lowest rate possible for your processing needs.

Many of our merchants are surprised at the flexibility we have in our fees. They’re also shocked at our transparency with our fees. Major banks, unfortunately, tend to have hidden fees. Don’t get suckered in with promises of “no transaction fees.” We’re willing to give you a free cost savings analysis based of your current processing situation as well as any quotes you’re evaluating.

Let’s hear your stories. Did you make the mistake of heading to your local bank when you opened a merchant account? How did you fix it? Did you find that an ISO was the better option? Share your story below and let’s chat about the best methods of opening a merchant account for your business.

Merchant Account Myths #3 – The Application Process is Too Time Consuming

Opening a merchant account years ago was difficult. You had to go fill out forms in person. Or if you were lucky – you could fax them in to your account rep. Communication could take days just to get to the starting line for your application. Thank goodness we live in 2015 and technology has advanced so much!

You can now fill out an application online and simply email docs (photo ID, voided check, and business info) to your account engineer and be up and running within 1-2 days. If a provider states it will take longer than 2 days to get approved, move on. Your time is worth more than that.

See? Not so hard is it!

Do you have any horror stories of a signup process that took way longer than it should have? Share your stories below. We deal with quite a few merchants that have experienced a long signup process.

Merchant Account Myths #4 – Switching Providers Isn’t Worth The Hassle

We get it. You’ve invested countless hours into forming the relationship with your account manager. You’re not happy with the price and fees, but changing providers has to be a huge hassle right?


The right provider should have no problem getting you approved, especially with the processing history you have under your belt. For your eCommerce site, it’s as simple as changing the gateway information in your existing shopping cart. In addition to ease of setup, you’re new provider should be able to switch you over within 2-3 business days. Say “so long” to your old provider and enjoy the right fit you’ve been looking for!

Merchant Account Myths #5 – All Merchant Accounts Are The Same

We’ve heard some very sad stories from some of our merchants that have made the switch to us. Their reasons for switching over vary, but include locked contracts, early termination fees, hidden fees, lack of customer service, etc. Bottom line? Not all merchant accounts are the same.

Many new merchants feel that all processing solutions are equal. The truth is – they’re not. The proof is in the details.

Our advice? Read the fine print before you commit. It’ll save you the headache in the long run. If you still have questions after reading the fine print, make sure you communicate your questions with your account manager. If they avoid the question or try to point your attention elsewhere, run! Your merchant account provider should be transparent about fees and their solution.

Do you have a story about the fine print saving you from a future headache? Share below and let us know!

Merchant Account Myths #6 – I Can Get a Merchant Account At Any Major Bank

When your business is in need of its first merchant account, your instincts may tell you that going to your local major bank may be the best bet. Wouldn’t any major bank be willing to give you a merchant account? Surprisingly, this isn’t always the case.

While many major banks will ensure you that they have the ability to set you up with a merchant account, underwriting can take quite some time only to result in a decline for various reasons. When this is the case, you’ve put all your eggs in the major bank basket and have to start fresh. Bummer!

What a disaster and a waste of time!

In this case, it is always best for time and the sake of your business to go directly to a merchant account provider that specializes in your industry. Not only do they have the relationships to ensure a proper fit, their relationships ensure competitive pricing and solid customer service.

Merchant Account Myths #7 – Larger Providers Are Better

Many of our merchants have, at one time, fallen into that trap that “bigger is better” when it comes to picking a merchant account provider. While some large providers may have the ability to take care of your business, MANY of them will not take the time to KNOW YOUR BUSINESS. Ultimately, knowing your customer is one of the most important factors.

Sadly, when it comes to large providers, there are high overhead costs that can lead to a decrease in customer service. You’ve been there before. You’ve spent hours trying to get in contact with someone that can take care of your needs. Do you really want this type of inconvenience when it comes to your money? You may be directed to a call center where you will probably have a hard time discussing your account with someone that knows your business. It’s a nightmare. It’s one of the most common complaints we hear from new clients.

Smaller, independent providers have a heavy focal point in customer service, understanding your business, and forming relationships.

Do you want to form relationships? Or do you want to be another number in the call center?

Merchant Account Myths #8 – Accepting Credit Cards Will Lower My Profits Due to Fees

When new businesses begin to decide on whether or not they should open a credit card to take payments from their customers, there’s a common error in thinking that takes place.

“What if these fees will lower my profits? Is it even worth it? Should I just take cash?”

It’s a very common and easy to understand fear. But the reality is, it couldn’t be further from the truth. In fact, the ability to take credit cards increases revenue by 25% in many instances. Another overlooked factor is that credit card payments are immediate. This can’t be said for checks and invoices which can take weeks (and sometimes months) to process. The biggest thing to remember is that you’re giving your customers options. Don’t ever worry about missing out on a payment ever again because of your fear of setting up a merchant account.

Did you have a fear of opening a merchant account with the idea that it would lower your revenue? How did your profit improve within the first few months of accepting credit card payments?

Now the real question to ask yourself is – what are you going to do with that extra cash flow?

Merchant Account Myths #9 – The Discount Rate Is The Most Important Factor

There’s a common thought that the discount rate is the most important factor. Before jumping to this conclusion, it’s important to reconsider this thought.

If you are unaware, the discount rate is the percentage taken out with each transaction. If your discount rate is 1.79% and you have a sale for $100, you’ll pay $1.79.

Beware! You need to realize that the discount rate is only one factor in the big picture. Don’t get suckered into a shady provider based off discount rate pricing. Call your provider so you understand ALL your fees. If you still have questions you need answers to, we’re here to help.

Share your stories. Do you have experience with a provider reeling you in with discount rate being the focus? Comment below and let us know.

Merchant Account Myths #10 – I Can’t Avoid The Early Termination Fee

There’s a common misconception that it’s nearly impossible to cancel your merchant account without an Early Termination Fee (ETF). While this may be the unfortunate case for many providers, it’s not always the case (and NEVER the case with Total-Apps).

If somebody is not happy, we let them out of the contract. This forces us to have exceptional customer service. The key is to know what to ask before you sign a contact. Know your rights and you’ll avoid the huge headache.

Have you ever been stuck in a contract due to a heavy early termination fee? Share your story below.