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The information in this article is intended for general information purposes only. You should not rely on it as the sole basis for making any business, legal, or other decisions. While we make every effort to ensure that facts stated are correct at the time of publication, we do not accept any responsibility for keeping this information up to date. Any views expressed in this article are those of the author and do not necessarily represent those of Pay.com.
Sharing is caringIf you want your business to be able to accept credit cards, you’ll have to sign up with a merchant service provider who will process those payments for you. As with many service-provision relationships, you’ll need to sign a merchant agreement (also called a merchant services agreement).
While we are all guilty of signing agreements without reading them, you should familiarize yourself with your merchant agreement before you sign. Payment processing is not something to mess around with – you want to be sure that your customers’ financial data is secure and that the funds will actually end up in your account.
Unfortunately, there are some dishonest merchant service providers out there and if you aren’t careful, you can find yourself getting burned. We’re here to explain exactly what a merchant agreement is, what elements it should include, and some red flags to look out for so you can be sure you do what’s best for your business.
Your merchant service provider, who will enable your business to receive credit card payments, is one of the most important services you’ll use as a business owner. You should make sure you understand all of the contents of the merchant agreement before you sign it.
A merchant agreement is a binding legal contract between you (the merchant) and the company that processes credit cards for you. The purpose of the agreement is to lay out the specific services that’ll be provided, all of the terms and conditions including fees, and what happens in the case of disputes.
By signing the agreement, you authorize the service provider to serve as an intermediary between you and your customer. The provider is responsible for processing all electronic payments through its network from start to finish, including ensuring that funds settle and are deposited into your account.
Each merchant service provider has its own merchant agreement, so there’s no standard that everyone uses. There are, however, certain sections that any good merchant agreement will have. These sections include (but aren’t limited to):
Merchant service providers use different pricing models depending on their own strategy. The agreement should describe in great detail exactly what fees you’ll be charged, how they are calculated, and what they cover.
Most providers charge both a transaction fee and a processing fee. A transaction fee is more likely to be charged at a flat rate per transaction, while a processing fee is usually a small percentage of each transaction amount.
Fees can vary quite widely from provider to provider, so make sure you do your homework on this one. Pay.com is a good choice because it charges a flat-rate per-transaction fee. There are no hidden fees, and you’ll always know exactly how much you’ll be charged.
This is the longest section of agreement and the one that is most likely to make your eyes glaze over, but it’ll save you future headaches if you read it carefully. It’ll include all of the rules and regulations that you are required to comply with. Most of these rules are based on industry standards and are probably fairly similar among all the providers.
Keep in mind, though, that the Terms and Conditions section is the ideal place for dishonest providers to sneak in clauses that you wouldn’t want to agree to (they are counting on you to just skim!).
Included in this section will be:
Not all merchant service providers are one-stop shops, but many will make things easier for you by including third-party agreements with other service providers as part of their contract. This generally happens when there’s a need to lease equipment (such as credit card terminals) or purchase a payment gateway.
Reading the agreement carefully and in full before signing will protect you from overzealous sales agents who may be leaving out crucial information in order to get you to sign.
It’ll also ensure that you are well aware of exactly how much you’ll have to pay and what your responsibilities are. Of course, if you see something you don’t agree with, you can always ask about it and if you aren’t satisfied with the answer, you can back out of the deal before it’s too late.
While reading the agreement, there are certain red flags you absolutely must look out for:
One last important warning is to be wary of any sales agent that is trying too aggressively to get you to sign. Many salespeople work on commission, and they’ll do anything in their power to get your signature, even if it’s not in your best interest.
If you encounter a sales agent that does any of the following, you should be suspicious and make sure you check the facts (or simply look for a different provider):
One of the most important features to look for in a merchant service provider is transparency. That is something that we pride ourselves on at Pay.com, and all of our terms and conditions are easily accessible on our website.
There are no hidden fees at Pay.com. Every merchant pays a flat-rate per transaction fee, and you’ll always know exactly what to expect on your bill with no surprises. We also don’t make you go through a long and onerous onboarding process – we’re all about keeping things quick and simple. All you have to do is fill out a few basic details about your business to get started.
Of course, we do our due diligence, but we try to keep the bureaucracy to a minimum. As we walk you through the process, we’re always available to answer any questions or explain anything that’s unclear.
Once you sign up with Pay.com, you don’t have to worry about the payment process. We take care of it all from start to finish and make sure you have all the right tools in place including a payment gateway, a merchant account, and payment processing.
Pay.com is easy to set up and intuitive to use. You can track all your transactions and fees on your Pay Dashboard. You can also add or remove payment methods at any time at the click of a button.
Choosing a merchant service provider is a crucial step in building your business and will allow you to start accepting credit card payments. Reading through the agreement and understanding all of the nuances and details will protect you against accidentally signing your life away to a less-than-ideal service provider.
Bottom line – if you’re looking for a quick and simple way to get paid, you don’t have to look further than Pay.com. Whether this is your first time selling online or you’ve got years of experience, Pay.com gives you the full transparency you’re looking for.
Like with any service provider, you’ll have to do some research in order to choose the best merchant service provider for your business. Don’t be shy – choosing a merchant service provider is an important step and you should feel free to ask questions and insist on clear answers. Here at Pay.com, we’d be happy to talk to you and see how we can meet your needs.
The term merchant services encompasses all of the tools and solutions that business owners need in order to be able to accept and process electronic payments. Examples of merchant services include payment gateways, virtual terminals, merchant accounts, and more.
A merchant account is a holding account. When a customer uses a credit or debit card to make a purchase, the funds are not immediately transferred to your account. Rather, they sit in a merchant account until the transaction has settled. A merchant account is a requirement in order to be able to accept online payments. You can go directly to a bank and open your own merchant account, but this is often a tiresome and bureaucratic process. When you use Pay.com, we set you up with a merchant account and save you the hassle.
Before you sign a merchant service agreement, make sure you fully understand all of the fine print and small details. The most important elements to go over with a fine-tooth comb are the ongoing fees, early termination fee, contract length, and any rules regarding legal disputes.
