This is a follow up to last night's rant about the disgustingly dishonest company that I continue to come across.
I pretended to be a retail store owner today and called into their sales department to get some info on what they offer. Their sales pitch is "we will only charge you 0.50% on every single credit/debit card you take!" I asked the sales rep, "so if I take $10,000 in credit cards, I will ONLY pay a total of $50 in fees?" His answer was a confident, resounding "YES!!!" That sounds all fine and dandy, especially since the average business owner pays about 2.5% in fees. How on Earth is this company able to offer such an amazing deal?!?! The answer is simple; they can't! The truth behind this "amazing" pricing is that the 0.50% is IN ADDITION TO the hard-costs of Visa/Mastercard. The typical hard-cost ranges depending on the rewards (and other factors) associated with each card, but is generally between 1.5 - 2.5%. Add the 0.50% to a typical 2.0% hard-cost and voila, you're back at the typical 2.5% that you're probably already paying!
Adding 0.50% to the hard-cost of Visa/Mastercard is a very typical program that almost every merchant service company can offer called "Interchange-Plus." The thing is, MOST companies are a lot more honest about how Interchange-Plus programs work, and will explain to the merchant that the fixed cost of 0.50% (or whatever the merchant company wants the mark-up to be) is in addition to the costs charged by Visa/Mastercard. This particular company DOES NOT tell you this, which makes them, to put it eloquently, fraudulent liars. DO NOT be fooled by deals that sound too good to be true and make sure to ALWAYS READ THE FINE PRINT BEFORE SIGNING!!!!!!!!! If you don't read the fine print before you sign, you will often receive your first bill which will be somewhere around 3%. You will be pissed and call in to cancel, only to find out you're stuck in a 3-year contract. Please please please do yourself a favor and call us if you ever have questions on pricing you are being offered from other companies!!!