Lesson 1
Myths of the Card Processing Industry
Myth #1 - There are many credit card processing companies out there, so some might provide a different service than others. I may be less safe using one company over another.
Not true. All banks, Independent Sales Organizations, and others re-sell the exact same service. Credit Card Processing services are actually provided by only a select few companies with processing networks in the entire country. Although these few companies may work somewhat differently, you basically get the same end result for your transactions with whomever you sign up with. This is because each bank, individual or sales organization that sells credit card processing services each has the ability to charge you higher rates, based on what they intend to earn, yet use the same few networks. They all pay the same wholesale rate, then mark it up, which is why you see so many different rates advertised. Make sure that you read the next lesson because these rates don't really reflect what you will actually be paying when you look at the bottom line total. This is one of the many gimmicks used to make you believe that you are paying less than you really are. Remember the golden rule that nobody is in business to lose money or to make no money at all. If you get something free for signing up with someone, you are always paying for it one way or another.
Myth #2 - I am already getting a great deal because I am friends with, related to or married to the person who signed me up for processing and they wouldn't give me a bad deal.
This is absolutely, positively, the #1 largest falsehood that we ever come across. Most of the time, they are the worst deals as these processing providers do not invite any competition at all since you trust the person making the deal. In this case, you decide not to shop. They didn't have to compete with anyone else and, therefore, most likely gave you a "standard" or slightly better-than-average rate, which allows them to feel like they gave you a reasonable deal. In fact, it's nowhere near a great deal. Additionally, the larger the company is they work for, the more hands need to be fed out of the deals they create. So it may actually be a good rate compared to their average rate. But because the average deal at their company is a high rate to begin with, however, you are probably paying through the nose.
Myth #3 - My bank gives good deals on other services that they offer or may even provide me special deals because I have also held my account with them for many years.
This too is one of the most incorrect statements many intelligent people make, but it happens all of the time and could cost you thousands of dollars. Many potential customers walk into the bank every day and ask for a new account. Of course, that’s where most people assume would be a good place to go. After all, it is a bank. That's where people go when they want to accept credit cards for their business, right?
Only if they want to walk right into a trap!
Banks are notorious for charging some of the highest credit card processing rates out there. This is because people walk into banks every day and haven't shopped anywhere. Banks know this, so they charge as much as possible. And some types of special "bundle" incentives offered by banks that save you $10 a month for having 2 accounts with them isn't really a savings when you realize that your credit card processing fees could be $50,$100, or even over $1000 per month less somewhere else! When you sign up to process with anyone, the money still goes through the exact same channels, into whichever bank account you want it to, at any bank you want it to. Again, there is absolutely no benefit to getting credit card processing service from your bank, unless of course they are giving you a good deal, which is highly unlikely as they are larger than most companies independently selling processing services, and have many more levels of corporate hands to feed your money.
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