In our ongoing series of exposing the trickery of merchant account companies, we decided to contact Leaders Merchant Services to take a look at what they offer. With a quick Google search, you’ll see that they advertise under the url www.rockbottommerchantaccounts.com. They want you to think that you’re getting “rock bottom” rates when, in fact, you’re getting a “bottom of the barrel” deal.
“Leaders Merchant Services” is one of the worst examples of trickery we’ve ever seen.
TRICKERY EXPERIENCE #1
We initially contacted them through their online form to request a quote. A representative responded with a prompt email requesting more information. After I indicated that I was looking for the ability to process credit cards for items sold through a website, he responded back with a simple listing of rates and fees (click the image of our email exchange to the right).
Here’s what they emailed us:
The total fees for our service are as follows:
Monthly Gateway Fee: $15.00 Monthly Customer Service & Statement Fee: $7.95 Batch Fee: $.35 AVS Fee: $.10 No Annual Fee No Application Fee
Notice the term “total fees”. If I were a merchant looking for a credit card processing, I would assume that this is what I’d be paying for all my transactions. I would assume that all my transactions would have the rates noted for Visa, MasterCard, Discover, and American Express. (When we actually received the contract, we find out that they offer three-tier pricing – the worst possible merchant account for a small business.)
Leaders Merchant Services is simply tossing out the bait hoping that we’ll bite.
When I noticed that he didn’t include PCI Compliance, I asked him if there was an additional fee. He immediately emailed back and apologized for not including it. Do you really think he forgot about a $69-$129 charge? Or, do you think he was instructed by his boss to leave that out because it might scare new customers away?
TRICKERY EXPERIENCE #2
A few days later, we received a marketing email from Leaders Merchant Services offering a promotion for the month:
Monthly customer service fee is only $4.95 a month.
Swiped rates are 1.09% & .27 cents a transaction for larger transactions.
Swiped rates are 1.39% & .18 cents a transaction for smaller transactions.
Keyed/Internet rates are 1.79% & .22 cents a transaction.
Free Terminal! There’s just a one time fee for shipping, handling & programming of $45
WOW – a promotion – sign me up! I noticed they’re now trying to lure me in with different rates than they offered during my first trickery experience, so I requested the “paperwork” in order to take a look at the fine print. When the email with the contract arrived, it included the following text in the body:
No application fees
No set up fees
No annual fees
No monthly customer service fee
No security monthly fee
I was excited to see that they were offering me such a great deal, and I couldn’t wait to open of the attached file to take a look. When I opened the contract, I WAS SHOCKED BY WHAT I READ! Open the contract and walk through the trickery with me.
Six Critical Reasons to Avoid Leaders Merchant Services:
They will give you three-tier pricing! (page 3) As I’ve mentioned previously, three-tier pricing is the worst option for small businesses. If you’re not familiar with what three-tier pricing is all about, click here for a quick lesson. Although they initially emailed us with a simple rate structure, now they’re finally telling the truth! On page three, you’ll notice the “+” sign next to Mid-Qual Rate and Non-Qual Rate.When a customer is using a rewards credit card or if the card is keyed into your cash register or computer instead of being swiped, plan to get charged the Mid-Qualified Rate – which is .60% + 1.79%. And, when your customers gives you a corporate credit card, when a customer’s address and zip code don’t match what’s on file, or when your sales aren’t sent through the terminal within 24 hours, you’ll be charged the Non-Qualified Rate – which is 3.99% + .60%. They failed to mention all of this in their initial “bait and switch” marketing to us. . .
They are locking you into a 3-year contract with a $350 termination fee.(page 4)
By signing this contract, we would have been locking ourselves into a three-year contract. Here’s what the fine print says:“If Merchant is approved, any cancellation by You of this Agreement within three (3) years from the date of approval or is terminated by Servicers due to an Event of Default by Merchant, will be subject to the applicable early termination fees and Merchant will be charged a fee for such early termination equal to (i)$350.00 if terminated before the completion of the first year of the Term; or (ii) $250.00 if terminated after completion of the first year of the Term but prior to end of third year of the Term (see section 22.1 of the Agreement-Program Guide).”
If we cancel in the first year, we’re charged a $350 termination fee. If we cancel after the first year, we would be charged $250. They failed to mention all of this in their marketing to us. Do you really want to be locked in for 3 years? .
They disguise their setup fee as a “Business Information Verification Fee.” (page 4) Remember how they said there was “no setup fee.” Take a look at page four, and you’ll see a $25 charge in the fine print.“A $25.00 Business Information Verification Fee will be assessed to Merchant within thirty (30) days of Merchant Account being approved.”
Of course it’s not a setup fee, we just need to verify that you’re a legit business. Great disguise! .
They charge a $4.95 regulatory fee.(page 4) What is that all about? What’s getting regulating and who is that money going to? We can tell you one thing…you’re bank account is getting regulated at $4.95 a month. What are you getting in return?.
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They automatically enroll you in “Premier Customer Care” for $12.95 per month. (page 6) Remember how they said “no monthly customer service fee” in the email that came along with the contract. BOGUS! Look at what’s in the fine print:”LEADERS automatically enrolls all of its merchants in its Premium Customer Care (PCC) program. This program provides merchants with: (1) a lifetime warranty under the same terms as the manufacturer’s warranty on our leased or purchased equipment, (2) LEADERS’ in-house Technical Support from 6:30 am – 6:00 pm PST, Monday through Friday, (3) free terminal supplies (including shipping), (4) discounts on peripheral equipment and, (5) free loaner equipment for up to 30 days during warranty repairs on leased or purchased equipment. Call 1-877-538-3377 and ask for the Installation and Training Department for all your PCC needs. The cost of the PCC program is only $12.95 per month (debited at the beginning of each month) and it WILL save you money!”They hide their Premier Customer Care (PCC) in the fine print and assume you won’t read it. In order to opt-out of this service, you have to check the box on the lower-right corner that says “PCC NO.” Seriously? Do you really want to work with a program that hides a fee for customer service in the fine print?.
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They only offer a $100 one-time bonus for a referral. (page 7) Although $100 is a nice pat on the back, I’m not really sure that it’s going to help your business on a monthly basis. You need a referral program like no other.
In all our research, we’ve never found a worse case of trickery than in the case of Leaders Merchant Services. Their initial email provided minimal information, and they portrayed themselves as a “full disclosure” company. In reality, they hide their outrageous three-tier pricing and disguise their fees in the fine print. You must know that there is a better option.
With the start of our new web-based education series, Best Merchant Rates is directly addressing the confusion that many small business owners experience in the process of acquiring a merchant account. By investigating specific merchant account providers such as Costco,Quickbooks,Elavon, and Chase Bank, we are highlighting hidden fees and escalating rates that aren’t discovered oftentimes until the merchant’s first statement arrives.
Several major online publications have picked up on the story (click to read):
As I was flipping through my daily copy of the Wall Street Journal, I came across an article that’s becoming all to familiar – “Hackers New Target: Small Firms With Lax Security.” Accompanying the photo of a sullen shop owner was the article that outlined how he was stuck with a $22,000 bill because cyber thieves planted a software program on the cash registers at his two Chicago-area magazine shops that sent customer credit-card numbers to Russia.
If you don’t have time to read the full article, here’s a short excerpt:
MasterCard Inc. demanded an investigation, at Mr. Angelastri’s expense, and the whole ordeal left him out about $22,000. His experience highlights a growing threat to small businesses. Hackers are expanding their sights beyond multinationals to include any business that stores data in electronic form. Small companies, which are making the leap to computerized systems and digital records, have now become hackers’ main target.
“Who would want to break into us?” asked Mr. Angelastri, who says the breach cut his annual profit in half. “We’re not running a bank.”
With limited budgets and few or no technical experts on staff, small businesses generally have weak security. Cyber criminals have taken notice. In 2010, the U.S. Secret Service and Verizon Communications Inc.’s forensic analysis unit, which investigates attacks, responded to a combined 761 data breaches, up from 141 in 2009. Of those, 482, or 63%, were at companies with 100 employees or fewer. Visa Inc. estimates about 95% of the credit-card data breaches it discovers are on its smallest business customers.
Hacking at small businesses “is a prolific problem,” says Dean Kinsman, a special agent in the Federal Bureau of Investigation’s cyber division, which has more than 400 active investigations into these crimes. “It’s going to get much worse before it gets better.”
Hackers are expanding their sites beyond big companies to include any business that stores data in electronic form. For small businesses, the impact could be crippling. Geoffrey Fowler reports for the Wall Street Journal.
In the time it takes to break into a major company like Citigroup Inc., a hacker could steal data from dozens of small businesses and not get detected, says Bryce Case Jr., a former hacker who broke into several government and corporate websites a decade ago and now runs an online message board for hackers called Digital Gangster. Now that small companies use computers, “the juice has become worth the squeeze,” he says. “Even a pizza place has addresses, names and credit-card information.”
Listen to the Wall Street Journal Audio Report Find out how your business could be vulnerable by listening to a short report on this cyber hacking incident. Click play:
PCI Compliance is Critical
According to the article, Mr. Angelastri is still paying off the $22,000 bill. Because the potential for theft is higher than ever before, PCI Compliance is not only critical…but mandatory. The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard for organizations that handle cardholder information for the major debit, credit, prepaid, e-purse, ATM, and POS cards. Defined by the Payment Card Industry Security Standards Council, the standard was created to increase controls around cardholder data to reduce credit card fraud via its exposure.
PCI DSS requirements state that you must select an approved scan vendor to scan any public IP address that connects to or can indirectly connect to the cardholder data environment. The cardholder data environment is that part of a network that possesses cardholder data or sensitive authentication data, including network components, servers and applications. For most merchants, this means your website and your office Internet connection. However, more devices may need to be scanned as well.
This is not something that is optional or to be taken lightly!
In fact, proof of PCI compliance is required of all merchants who accept credit cards. Fines and deadlines for non-compliance vary depending on the acquiring bank and credit card companies you accept.
How Can Best Merchant Rates Help You Become PCI Compliant?
All merchants account holders through Best Merchant Rates are enrolled in our PCI Compliance Program through SecurityMetrics. For all new account, there is an annual fee charged to your account after your first quarter of processing transactions, and it is renewed on a yearly basis. We partner directly with SecurityMetrics to provide the following safeguards:
12-month service
PCI approved external vulnerability scanning
Online PCI Self-Assessment Questionnaire (SAQ)
Scans performed automatically each quarter
Unlimited rescanning
Unlimited calls to customer/technical support
Use of Site Certified logo
Acquirer reporting
Although PCI Compliance can be a confusing process, we do our best to ensure that you are well-informed along the way. This is a critical step for every small business owner, and that’s why it’s so important to Best Merchant Rates.
Watch this pre-recorded live webcast with Danny Choi, Founder and CEO of Best Merchant Rates. Listen in as he shares three secrets to saving money and adding to your bottom line.
We’ve already pointed out the trickery of Costco, but there are even more large corporations who build on your existing trust in order to lure you into processing credit cards with them. Today, we want to highlight how Intuit leverages the QuickBooks brand to develop a merchant services business.
As a small business owner, you may be asking, “Won’t QuickBooks just provide me with a quick and easy way to process credit cards?”
Yes, it may have that same soothing color scheme of green and gold.
Yes, it may integrate into your QuickBooks software.
Yes, it may come with a free credit card reader for your mobile phone.
BUT, it will come at a hefty price!
Although Intuit may not pass you off to a third party to process transactions like Costco does, they’re still using the same techniques to overcharge you.
You trust QuickBooks to begin with.
Intuit adds merchant services to the mix.
Intuit now hopes you’ll just process credit cards without thinking about the cost.
They are counting on the borrowed trust (as an existing QuickBooks customer) to get you to sign up without asking too many questions. Our advice…don’t trust QuickBooks or Intuit to process credit card transactions!
Three “Quick” Ways that Intuit Overcharges Small Businesses
After speaking with a number of our own customers and conducting in-depth research of Intuit customer complaints, here are the top three reasons why you shouldn’t go with their merchant accounts.
Click image to read Intuit's small print!
Intuit buries the fine print on their pricing. When you land on their website, they ask you to select a method of processing credit cards. Then, you’re barraged by more all sorts of sales jargon that you’ll need to wade through to find their pricing. Click on the pricing tab, and you’ll notice small numbers next to their rates that lead to footnotes. Go ahead and see how long it takes you to find those footnotes on the page. It took us five minutes of clicking around to finally find them under “important disclosures” at the very bottom of the page. We made it easy for you by capturing a screenshot on the right. Click to see what Intuit is trying to hide.
Intuit is using a tiered pricing structure to overcharge you. Based on an initial glance, you may think that you’ll pay 1.64% on all swiped transactions and 2.44% on all keyed transactions. Not so fast! Look at the fine print, and you’ll notice that some Non-Qualified Transactions will be charged 3.87% and an additional $.07 each. That’s quite a bit more than what seemed clear on the surface. As a small business, it’s important to note that anywhere from 50% to 80% of your transactions are going to be considered Non-Qualified (rewards and corporate cards) and fall into the 3.87% rate category. Read this minor detail is something Intuit is hoping you won’t see:
“All Visa/MC/Discover Network transactions that do not meet the requirements stated above, business cards, foreign cards and transactions that do not meet Visa/MC/Discover Network requirements for the best interchange program will be charged a “Non-Qualified Rate” of 3.87%. Non-Qualified transactions are charged an additional $.07 each.”
They refocus you on “quick and easy” rather than on transparent and fair. Intuit has built the QuickBooks business on the values of “quick and easy” which are both great qualities when keeping track of expenses as a small business. This mantra gets repeated over and over in their sales process, but it ultimately masks the fact that the merchant is getting overcharged. Yes, you do want things to be easy, but we also want the pricing to be transparent and fair.
QuickBooks is a wonderful way to keep track of your books, but they don’t want it to be easy to see how much you’re spending on credit card transactions. Don’t be duped by the green and gold that you’ve trusted for years. There are better solutions that don’t include getting overcharged.
This week, we headed on over to Chase Bank to look into a merchant account. We quickly found out that Chase Paymentech uses one of the most common credit card processing fee structures – the three-tier system.
The first tier is known as the Qualified Rate, which is when an individual swipes their credit card in your retail location in person. This is the best rate, and it is almost always the one advertised by merchant providers to small businesses to lure you in with a low rate.
When a customer is using a rewards credit card or if the card is keyed into your cash register or computer instead of being swiped, plan to get charged at the second tier, or the Mid-Qualified Rate.
But, here’s when your rate really starts to skyrocket:
When your customers gives you a corporate credit card.
When a customer’s address and zip code don’t match what’s on file.
When your sales aren’t sent through the terminal within 24 hours.
In these cases, you’ll be charged the third tier pricing, which is the Non-Qualified Rate of 3.44%. Although Chase clearly indicates what the rates will be at each tier, how will you know which transaction will be charge which rate? The only way you’ll really find out is when you receive your monthly statement and they deduct it from your bank account.
In reality, Chase Paymentech is not being transparent with how much they’re pocketing at each tier.
Let us be the first to tell you…three-tier pricing from Chase is the worst possible fee structure for small businesses!
Three Tough Questions to Ask Chase Paymentech
Chase Bank is trusted by many, and they’re counting on this trust to dupe you into signing up for a merchant account. By saying “yes”, you’ll literally being buying an overpriced service. Click the image to the right to download a pdf of Chase Paymentech’s latest pricing.
Click image to download Chase pricing!
Why are you charging me a $100 setup fee? This is an instant $100 in the pockets of Chase for no other reason than the fact that they can. Don’t just hand it over without asking why. .
Why are you pocketing an extra 1% on all my debit card transactions? Up to 60% of all small business transactions involve a debit card. What you may not know is that the wholesale rate passed along by Visa/MasterCard is .62%. If you Chase’s lowest rate which is 1.62%, they’ll be pocketing a full 1% from that transaction. This may not seem like alot, but it really starts to add up! They’re not really looking out for your small business, are they? .
Why are you demanding a 23 cent fee
for every transaction?
Think of it this way. For every four transactions, Chase will be taking almost one dollar out of your pocket! That doesn’t even include the Qualified, Mid-Qualified, or Non-Qualified Rate that will be charged on the amount of the transaction. It may seem small, but it really adds up.
Go ahead and call Chase Paymentech right now at 800.708.3740 to ask them the tough questions. As a hard-working, small business owner, you deserve to know why someone is trying to overcharge you. Just because you bank with a large company doesn’t mean that they’re going to give you the best pricing on your merchant account. Do your homework!
Let me first say that we absolutely love Costco! They have incredible deals on most products, and those giant bags of pita chips are irresistible around the office.
Please beware that the good deals stop when it comes to a merchant account.
You may have picked up a flyer on the way out the door or received a fancy looking email in your inbox. Here’s the problem. You’ve grown to trust Costco to provide you and your family with great prices on high quality products. On top of that, their return policy (especially on electronics) is the best.
As a small business owner, you may be asking, “Why wouldn’t Costco give me that same value with a merchant account?”
Well, here’s the catch! Costco partners with a third-party provider called Elavon (formerly NOVA) to offer you credit card processing. It’s there way of making extra cash without having to actually start another business segment. Essentially, Costco is simply providing referrals to Elavon, and Elavon pays them a commission.
You trust Costco to begin with.
Costco adds Elavon (big merchant account provider) to the mix.
Elavon now hopes you’ll trust them even more.
They are counting on the borrowed trust from Costco’s customers to get you to sign up without asking too many questions. Our advice…don’t trust Costco or Elavon!
Four Tricks Costco / Elavon Plays on Small Businesses
After speaking with a number of our own customers and conducting in-depth research of Costco customer complaints, here are the top four reasons why you shouldn’t go with their merchant accounts.
Click image to see Costco's fine print!
Costco / Elavon lures you in with a low rate that doesn’t even apply to most of your transactions. This is the most common complaint from disappointed small businesses across the web. When evaluating their monthly statements, they found higher rates than the percentage advertised. The low rate that’s shown to the right (click to enlarge) is just for “qualified” transactions under a tiered pricing structure, which would only include non-rewards, non-business credit cards (standard Visa/MasterCard) that are swiped on the spot. This will be a very small percentage of your transactions.
Costco / Elavon doesn’t tell you that they’re over-charging for debit transactions. Up to 60% of all small business transactions involve a debit card. What you may not know is that the wholesale rate passed along by Visa/MasterCard is .62%. If you receive Costco / Elavon’s lowest rate which is 1.48%, they’ll be pocketing almost 1% from that transaction. They’re not really looking out for your small business, are they?
Costco / Elavon charges a much higher rate for “rewards cards.” As with anything, the fine print on their website (click the image to see a full-size version) is where important information is often hidden. In the case of Costco, the fine print is right on their own website. Read below:
**Visa/MasterCard/Discover service is sponsored through U.S. Bank. Rates listed are for qualified transactions. Reward cards process at a higher rate. Contact Elavon for details. A monthly minimum charge applies when qualified transaction fees and per-item charges are less than $20 per month. Annual interchange or assessment increases by Visa/MasterCard or Discover may affect these rates. Rates and fees may change without notice. Rate and acceptance are subject to underwriting. Call Elavon at 1-888-474-0500 for all terms and conditions.
Notice that it says – “Rates listed are for qualified transactions. Reward cards process at a higher rate.” Rewards credit cards are those cards that allow you to cash back, free travel, or other perks. Did you know that rewards cards now account for up to 70% of all credit cards? That means that the rates Costco is quoting don’t even apply to 70% of your transactions!
Costco will let you out of your contract…for a price.
Once you discover rising rates and extra fees, you’ll probably do anything to get out of your contract. Costco / Elavon will be more than happy to let you out of the agreement…as long as you pay a $95 cancellation fee as well as your remaining monthly fees.
By the way, did you notice that they’re giving you a $300 gift card? That’s not just because they’re nice. They plan on making even more than that off you from hidden fees. Don’t just take our word for it. Do the research yourself and find out that the Costco / Elavon relationship is not in your best interest.
Buy your pita chips (and all that other yummy stuff) from Costco, but we’re strongly encourage you to think twice about a merchant account. There are much better solutions that will ultimately save you time and money.
Founded in 2005, Best Merchant Rates is passionate about helping small businesses thrive. Concerned about the state of the merchant account industry (bait and switch, intentional confusion, overpromising, hidden fees, and hounding by sales people), we're committed to honoring customers with transparent pricing and the best rates available on the market.
“Leaders Merchant Services” is Leading the Way With Hidden Fees!
In our ongoing series of exposing the trickery of merchant account companies, we decided to contact Leaders Merchant Services to take a look at what they offer. With a quick Google search, you’ll see that they advertise under the url www.rockbottommerchantaccounts.com. They want you to think that you’re getting “rock bottom” rates when, in fact, you’re getting a “bottom of the barrel” deal.
We initially contacted them through their online form to request a quote. A representative responded with a prompt email requesting more information. After I indicated that I was looking for the ability to process credit cards for items sold through a website, he responded back with a simple listing of rates and fees (click the image of our email exchange to the right).
TRICKERY EXPERIENCE #2
They will give you three-tier pricing! (page 3)
As I was flipping through my daily copy of the Wall Street Journal, I came across an article that’s becoming all to familiar – “
We’ve already pointed out 
This week, we headed on over to Chase Bank to look into a merchant account. We quickly found out that Chase Paymentech uses one of the most common credit card processing fee structures – the three-tier system.
Let me first say that we absolutely love Costco! They have incredible deals on most products, and those giant bags of pita chips are irresistible around the office.
