Future Credit Card Merchants Beware: Read This First

by David Dierking

6 min read

Future Credit Card Merchants Beware: Read This First
In many ways, it’s now easier and less expensive than ever to run a business with many of the bells and whistles previously associated with larger companies: accounting software (my favourite!), websites, paperless storage, smartphones, voicemail, extensions, and so forth. It’s even a no-brainer to start accepting credit cards.

Just about anyone can set up a business to accept credit cards. On a recent trip to Washington, D.C., I took a limo to Dulles Airport to catch my flight home to Toronto. My limo driver plugged a small device into his iPhone, swiped my credit card, and put the charge through. I “signed” the charge on the screen with my finger, and I received an email receipt showing the limo company’s name, the date, time, receipt number, and charge. The driver was a relative newcomer to the U.S., but he could accept credit cards on the fly. I was very pleased for him.

My own experiences accepting credit cards in Canada weren’t great. I had set up my company to accept credit cards through a well-known major credit card processor some years ago, and it was a huge pain: the sign up paperwork was onerous, and I had to pay high monthly fees and minimums in addition to high discount percentages. Because I wasn’t renting a terminal, I had to use a touch-tone phone system to process cards and the only transaction records I had before a month-end statement arrived were my own hand-written notes. Furthermore, I was locked into an automatically-renewing contract with ridiculous penalties.

Eventually, I was thrilled to be free of that albatross when I was able to cancel the contract before they renewed it automatically a second time. But then, I had to find a suitable replacement because I liked having the flexibility and security of accepting credit cards, not to mention the improved cash flow.
I signed up with a provider that was recommended to me by a business associate. He said it was easy to sign up and I didn’t have to make a commitment. As it turned out, the merchant credit card provider wasn’t committed to me either. After I processed a few credit card charges, this provider terminated my merchant service via a “no reply” email and refused to give me a reason. It took me forever to find an email address (not a phone number, mind you) so that I could ask why. The terse response was basically the equivalent of “because we said so and we don’t have to tell you why.” I was a little insulted, actually. And, I was back to square one.

So on I went, performing some internet searches and making some inquiries; there aren’t that many choices in Canada, as it turns out. I won’t name names, but I can tell you that I experienced some high-pressure sales tactics from one company. I was inundated with emails and some unprofessional conduct. The nature of these emails was getting so intense, that I decided to search for complaints against this company. Sure enough, there were plenty, citing shady practices and hidden termination fees. So, after shaking off a very tenacious sales rep, I was again back to square one.
During the course of my searches, I learned a few things that I can share with you. When you’re looking to accept credit cards, do your homework and read the fine print so that you know the following and can compare your options with no surprises:

Know your costs:
• What are all the service fees, costs-per-transaction and fees applied by credit card companies? Is there a monthly service fee on top of the percentage charged? Is there a monthly minimum

• What is the charge for premium cards (such as loyalty, reward and silver/gold/platinum/etc. cards), which are so ubiquitous these days?

• Are you required to use (i.e. rent or buy) a terminal? If so, what is the cost?

• If you input transactions online or over the phone without the card being present, is there a separate or extra processing charge per transaction?

• What if there is a customer dispute? How are refunds handled? Can you speak to the provider?

Know your benefits:
• What credit and/or debit cards can you accept?

• Can you use a device on your smartphone to swipe a customer’s card, the way my limo driver did?

• Can you login to a website or use a smartphone app without having the customer’s credit card in your hand, in the case of phone or fax authorizations?

• What currencies can you accept? (Likely only one currency, usually Canadian dollars)

• Can your customer pay you with a foreign-issued credit card?

• Does it send or print out a receipt for your customer?

• Do you, as the merchant, get a receipt printed or sent to you by email?

• How can you look up historical transactions and charges?

• How quickly do the funds appear in your bank account?

Know what happens at the end of the contract period or if you want to cancel:
• Is there a contract? If so, how long is the term?

• What happens if you need to cancel? What are the fees or penalties?

• What happens at the end of the contract? Does it automatically renew?

Most importantly, know your rights:
• All payment card networks in Canada (including Visa, MasterCard, American Express, Interac and others) now adhere to the Code of Conduct for the Credit and Debit Card Industry in Canada, introduced by the Federal Government in 2010. You can find a link to the code here.

• This Code of Conduct includes some important rights for merchants, including the following:

o Easy-to-understand, detailed, and transparent merchant agreements and monthly statements, including rates charged for each type of payment card, as well as the total fees for each rate;
o Payment card websites are to show all fees;
o Payment card networks will ensure that merchants receive a minimum of 90 days’ notice of any upcoming fee increases or new fees;
o Merchants who receive notice or new or increased fees are actually in luck because they can cancel their contracts without penalty within 90 days of receiving this notice, even if they’re in a long-term contract.

So, after my weird experiences and searches, what did I do in the end? I went with one of Intuit’s credit card processing solutions. My two choices were:
• Merchant Services, which offers the ability to accept credit cards directly in QuickBooks, and
• GoPayment, a mobile solution that offers the ability to process credit card payments on an iPhone or iPad.

All Intuit payment solutions have no contracts, cancellation fees, and competitive rates.
And yes, when I had a question, they answered me, and quite nicely too. I’m not saying you should make the same choice I did in the end. Every business is different. What you should do is do your homework, know what to expect, and don’t let anyone pressure you. Make the decision that’s best for you and your business, but make it an informed one.

Esther Friedberg Karp, MBA, is president of CompuBooks Business Services in Toronto and holds a variety of QuickBooks certifications in Canada, the U.S., and the U.K. Her company’s clients hail from all industries in a number of countries, and they depend on CompuBooks to provide them with seamless administrative and accounting systems. CompuBooks also provides consulting and educational services to various accounting, technology and consulting firms worldwide.

In addition to being a featured speaker at accounting conferences, Esther has designed, authored, presented, and recorded educational courses for the Sleeter Group, Intuit Canada, Intuit, Inc., Intuit UK, Intuit Australia, Intuit Global, and others.

Esther can be reached at 416-410-0750 or esther@e-compubooks.com.

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