It’s what all merchants are looking for; who doesn't want the “best merchant rates”? The real question for merchants is how to go about achieving this while avoiding the pitfalls of selecting a poor service provider.

To be the best, can you just claim it or buy the best domain name? The Best Merchant Rates may be an SEO search term, but a company name? Isn't that like naming your company “the best cola” instead of Coke or Pepsi? Do you trust a financial services company with a generic company name like “Merchant Services” or do you go with brand names like Bank of America or Costco?

For small businesses looking for the best merchant rates, turning to mega-banks and mega-retailers is not their best choice. For example, Bank of America Merchant Services advertises heavily with an asterisk. Interestingly this same bank, until public pressure forced it to change course, wanted to charge customers $5 a month to use a debit card. The Ellen Show posted this hilarious message from Bank of America. It would be funny if it wasn’t true of the mega bank approach to payment services. And Bank of America has been running commercials touting its "cash rewards" credit card “offering no annual fee, a $50 sign-up bonus, then a 1 to 3 percent cash refund on your spending”. Mega banks are trying to steer your customers to pay with credit cards over debit cards with the result that merchants will end up paying more in Interchange fees when accepting card payments. Sounds like a conflict of interest to us. Alternatively, will you turn to a mega retailer, who fought for lower Interchange for themselves but oddly isn’t passing the regulated debit Interchange on to the small businesses it’s marketing to? Costco’s fine print for its “rate-as-low-as” offer is followed by an asterisk that reads in part: “Rates listed are for qualified transactions. Reward cards process at a higher rate. A monthly minimum charge applies when qualified transaction fees and per-item charges are less than $20 per month… Rates and fees may change without notice...” etc. with even more fine print terms and conditions.

Does your search turn to the internet? What keyword phrase do you enter into your favorite search engine? Are you searching for the “best” merchant account or perhaps the “best” merchant service? And how will you know the best when you see it? To complete this task you will likely begin to get offers and compare discount rates and fees. In a merchant account comparison, how do you choose the best merchant services vendor for your business? Do you make a decision solely on the best merchant rate quote or do you take other factors into consideration?

Here is our best practice recommendation for all merchants to consider when shopping for merchant services:

1. Insist on an Interchange pass through pricing model (keyword search: “merchant Interchange rate quote”).
2. Insist on a month-to-month term (keyword search “month to month merchant account”).
3. Insist on open platforms verses proprietary processing systems designed to lock you into not being able to easily move to another vendor. Many providers sell (or worse…lease) proprietary bankcard terminals that will only work if you continue to process with them. Others follow this same model with payment gateways that once integrated into your point of sale or ecommerce platform leave you with a single processing choice (and we all know what happens to prices when there are no competitive pressures and no other choices).

Once you identify service providers that meet this criteria you can then begin your comparison. Important note, please don’t trust the “marketing” proposal but instead read all the fine print for yourself before you sign any application!

With so many credit card processing companies in the market, and without adequate knowledge of the payment industry, it can be hard to decide which merchant services provider is the best for your business. If you are shopping, please read these testimonials and include Vantage Card Services in your RFP. Vantage provides a host of online resources and personal consultations to help small business. On MerchantRates.com you can get an instant Interchange rate quote and customize the proposal specifically for your business. There is a buyer’s guide with frequently asked questions as well as numerous resources to help you gain a better understanding of the industry’s Interchange schedules.

Please share your experiences and most effective shopping strategy with us here.