Get Your Water at Sam’s Club, But Don’t Get a Merchant Account!

Sams Club Merchant Account - Credit Card ProcessingAs we continue our eye-opening blog series on the trickery of credit card processing companies, we thought it was time to turn our attention to the “other” big box retailer who offers merchant accounts these days…Sam’s Club. We wanted to see if they took a similar path as Costco with their sales techniques. Frankly, we hoped that they’d step up and treat small businesses differently.

After Googling “Sam’s Club Merchant Accounts”, we headed on over to to fill out an online application. Guess what? After 36 hours, they still hadn’t called or emailed. We’re not quite sure how these companies can treat potential customers this way and still stay in business. We didn’t want to wait around any longer, so we jumped onto their handy “chat with a consultant” feature to get the conversation going.

Asking the Right Questions to Get All the Answers
After asking for the details in the online chat, Josh provided this information and our conversation continues below…

[Josh] Visa/MC/Discover Credit & Debit: 1.98% + $0.31 per transaction
American Express (optional): 3.50%
Batch Settlement Fee: $0.00 per batch
Monthly Minimum Processing Requirement: $5
Annual Compliance Fee: $39.95
First Data Global Gateway:  $149 setup / $8 per month

[Me] I thought I saw 1.49% + .20 cents on the website…?
[Josh] You did. However that is when you swipe cards. Processing online is considered more risky per Visa/MC. Therefore, more to process.
[Me] That’s weird that the site doesn’t say that.
[Josh] It should, it probably says retail or something like that.
[Josh] It’s in the ** at the bottom of the page.
[Me] Get exclusive, low rates. 1.49% + 20¢ per transaction1
[Josh] Rate applies to retail card-present transactions with an average ticket up to $350. Some types of businesses are subject to different rates

Frankly, this is not unusual. With most all the companies that we’ve researched, they rarely advertise what you really get. They advertise the “Qualified Rate”, but they fail to mention that over 50% of your transactions won’t qualify.

Three Reasons to Avoid Sam’s Club as Your Credit Card Processor
After multiple emails and providing a SSN, bank name, account number, and routing number, this is what we finally discovered about the merchant accounts that Sam’s Club offers to small businesses…

  1. Sam’s Club has a $149 “start-up” fee.
    Strike one. That’s an immediately $149 out of your pocket before you even start processing credit cards. With many merchant account providers waiving any type of setup fee these days, there’s really no reason to expect to pay one. Strike one.
  2. Sam’s Club has a 36 month contract with a $90 cancellation fee.
    Strike two. They’re locking you in for three years. Although this isn’t that unusual, we don’t think that it’s necessary anymore. Small businesses should have the right to change credit card processors if they’re being overcharged.
  3. Sam’s Club advertises one rate and fail to mention their SURCHARGE on rewards cards.
    While examining their application and agreement, it became apparent that the 1.98% that Josh quoted us was only for “qualified” transactions. This would include any credit card that was not a business or rewards card. If we processed a business or rewards card (any card that offers the consumer a reward of any type) with an Interchange rate of 2.70% (passed along from Visa/Mastercard), we would be charged the 1.98% plus the difference of the Interchange (2.70% – 1.98% = .72%) plus a surcharge of 1.49%. See the calculation below…
    1.98% – Qualified rate quoted by Sam’s Club
    + 0.72% – Difference between the Interchange rate (2.70%) and the Qualified rate (1.98%)
    + 1.49% – surcharge by Sam’s Club because you’ve processed a business or rewards card
    = 4.19% – total rate charged on the Sam’s Club transaction
    Ironically, he forgot to mention this small detail in our initial online chat. In fact, it required multiple emails before Josh was willing to share that all rewards cards get hit with the 1.49% surcharge as well. That’s typically 50% of the all transactions for a small business. STRIKE THREE.

We’re hoping that Sam’s Club will wake up to the reality that small businesses are the bread and butter of our nation and that overcharging them isn’t doing anyone a favor. Remember, there is a better option.