What are the worst credit card processing companies to avoid in 2023?
Many credit card processing companies have hidden fees, often referred to as "swipe fees," "transaction fees," or "service fees." These can significantly increase the total costs for businesses without clear communication.
Some of the worst credit card processors employ long-term contracts with cancellation fees, locking businesses into agreements that can essentially penalize them for seeking better options.
Merchant account providers are sometimes accused of deceptive practices, including misleading sales pitches that overpromise on service quality while underdelivering.
Companies like Leader Merchant Services have been flagged for irregularities in transaction fees, often charging higher rates than initially disclosed, which can completely erode a business's profit margin.
Equipment leasing for credit card terminals is often touted as a cost-saving measure, yet many merchants discover that they end up paying far more than outright purchase prices due to ongoing fees and equipment finish value.
Many low-cost processing companies offer minimal customer support, leaving businesses without timely assistance when financial transactions are crucial.
Industry estimates indicate that approximately 18% of credit card processing fees are not disclosed upfront and are instead tacked onto monthly statements, leading to confusion and distrust among users.
Small businesses are particularly vulnerable; studies show that they often lack the negotiating power to secure better rates compared to larger firms, further emphasizing the importance of transparency in pricing.
Fraudulent practices exist where companies ask for extensive personal information during signup phases, potentially leading to identity theft or unwanted solicitations.
The Payment Card Industry Data Security Standard (PCI DSS) requires compliance for any business accepting credit cards, and some processors impose heavy fines if merchants are found non-compliant.
Chargebacks—when customers dispute a transaction—can be particularly problematic for businesses, as some processors apply high fees for chargebacks without clear explanation regarding the procedures involved.
Certain credit card processors are known for poor risk assessment methodologies that could flag legitimate transactions as fraudulent, causing interruptions in essential sales.
Payment processors that operate globally may impose additional foreign transaction fees, impacting businesses dealing with international customers without adequate disclosure.
The growing trend of integrating payment processing into eCommerce platforms means some traditional processors have fallen behind, offering outdated technologies or poor integration capabilities.
It's a misconception that all credit card processors provide the same levels of security; differences in encryption methods can expose businesses to varying levels of fraud risk.
The sophistication of account termination practices is worth mentioning; some processors execute abrupt account closures without notice based on algorithm-driven risk assessments, severely impacting businesses relying on their services.
Merchant services often upsell additional products like gift cards and loyalty programs, which can lead to overwhelming choices, straying from core processing needs and increasing expenses.
Regulatory changes, such as the EU’s PSD2 directive, aim to enhance payment security.
This directs businesses to work with processors that comply with new legislative standards to avoid potential fines.
Blockchain technology is beginning to disrupt traditional credit card processing, offering an alternative that may minimize transaction fees and increase transparency.
Credit score requirements are evolving; even businesses with less-than-perfect credit history can access credit card processing services, leading to an increase in high-risk processors that may charge exorbitant fees without adequate service.