The ins & outs of Merchant Card Services



Two diferent sized merchant card services machines are displayed on Michelle Conner's desk at Baker Boyer bank.


Held up for a photo in Michelle Conner's office at Baker Boyer Bank, a merchant card services brochure explains the process for prospective businesses.


A display of merchant card services equipment sits on the edge of Michelle Conner's desk for a photo op as she works in the background. Merchant card services allow business to accept Visa, Mastercard and Discover through the use of swipe machines.


Baker Boyer AVP/Banking Division Consultant Michelle Conner demonstrates the use of a merchant card services machine in her office at the Main Street branch of Baker Boyer. Conner and others at local banks are spreading the word about other merchant card services companies luring businesses in with low rates but not disclosing many hidden fees.

The opportunity to save money seemed intriguing enough as Damon Burke read through a letter inviting him to switch credit card processing companies.

Burke, the owner of gourmet grocery Salumiere Cesario, read through the solicitation with the words "Merchant Card Services" in the body. He recognized the name as the same service his Second Avenue business receives through Baker Boyer Bank.

The letter, in and of itself, raised no suspicions, even though it hadn‘t come from his bank at all. Within days of its arrival, Burke received a visitor. The man told him he had stopped by the shop to offer Burke a better rate on his credit card processing service.

But as Burke asked more questions, the answers didn't add up. The man wouldn't provide a rate quote. He wouldn't let Burke even make a copy of the information he was offering.

"It didn't feel right, and - long story short - these guys were from a competing company and they were promising something they couldn't deliver," Burke said.

Immediately after, he called Michelle Conner, assistant vice president/Banking Division consultant for Baker Boyer, who represents that operation's Merchant Card Services.

She had been hearing the same story - or a similar version of it - too many times over the past couple of months.

"We've had surges like this over the years," Conner said during a recent office visit.

Over the last decade she said the issue has come up on average about once a year as independent companies attempt to entice merchants with promises of savings.

But this time is different, she said.

The third-party organizations reaching out to some of her clients - and the clients of other local banks - represent themselves as partners of the banks. The association makes the business owners feel safe to make the switch. But when they do and the hidden fees are piled on, they discover the bank had nothing to do with it.

"I've never seen it as bold as I've seen it this last year," Conner said.

What appears to be a pitch for something good in many cases has turned out too good to be true, Conner said. But then getting out of the relationship is not easy either. It often involves spending several hundred more dollars, she said.

The brashness - and in some cases, downright misleading tactics - has caused some in the local banking industry to consider an educational campaign targeted to business owners. The efforts would be designed to help businesses in a down economy understand what to look for in the fine print.

Conner said she can see why business operators are interested in listening to the pitch for cost savings.

Merchant card services - a generic term for the services businesses receive in credit and debit card processing - are one of those behind-the-scenes expenses that customers aren't likely conscious of as they pay for their goods. They can be a big expense, however, for those providing goods and services.

For some businesses, such as restaurants, banding together through group associations can help with negotiating power for rates and fees, Conner said.

But for small businesses that deal in relatively low volume, those transactions can quickly add up.

At Salumiere Cesario, for instance, the profit from a $3.50 loaf of the store's specialty bread is eaten up by processing fees if the customer pays with a card, Burke said.

To be clear, not all independent service providers should be lumped together. There are any number of reputable companies that offer processing services, Conner said. Weeding out the good from the misleading is the trick.

Business owners can help themselves by making sure they're clear on one essential bit of information: who are you dealing with.

Not being local doesn't mean the business isn't legitimate. It does mean, however, that you aren't able to walk into an office and talk to them directly.

"If they don't live in Walla Walla - once they have you signed up and set up, they leave," Conner said.

For anyone thinking of making a switch, Conner said a number of questions are in order

"Most importantly, you have to know who you're dealing with on some level," she said.

The company may represent itself as being from your bank. But make sure that's true.

Also, take the time to learn the details.

"Ask what the cost is. What's my monthly fee? Is there a statement fee? A batching fee? A per-item fee? There might be an equipment component," Conner said.

It's in these - and numerous other possible fees - where the cost savings that were promised disappear, and the switch actually becomes more expensive. And the fees are just the start.

In many cases, some merchant card services representatives base their fees on an estimate of monthly sales. But if it's a particularly good month and sales are higher than the estimate, the firm may hold over the additional funds without the merchant even realizing it.

"The big thing is: It can really damage your business," Conner said.

"I've seen really bad horror stories to the point that I've had to help a client write a letter to the Attorney General's Office."


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