What is Merchant Account Scam and how to avoid it?

With the development of the e-commerce industry, merchant account scams have been on the rise. Many merchant account scam advertisements make customers believe in low monthly fees. The merchants are deceived into believing the low fees scams and later find out about the numerous hidden fees.

It is because of merchant account scams that almost 80% of the companies either have a slow start in the e-commerce world or fail altogether.

Watch out for the Merchant Account Scam!

Companies that use merchant account scams as a mean to earn profit make sure that the merchants who fall for their scam end up paying the commission that they are supposed to pay the payment processing companies.

In order to avoid a merchant account scam you need to watch out for:

  • Hidden fees - to avoid merchant account scam business owners must make sure that there are no hidden fees.
  • Industry - merchants should do a through research of the market
  • Free Terminal - if they tell you that there is no terminal fee, then they are wrong. They must be charging it else where.
  • Hardware - research hardware in order to avoid paying huge commissions.

Hidden Fees

Hidden fees tend to include:

  • Termination fees
  • Cancellation fees
  • Gateway fees
  • Batch fees
  • Licensing fees
  • Retrieval fees
  • Chargeback fees
  • Hidden setup charges
  • Over limit fees
  • Bank setup fees
  • Software fees
  • Customer support fees
  • Annual fees

Merchant Account Scam Ads

Advertising is one of the ways through which most of the merchant account scam work. Many of the ads mislead the business owners into believing that there is no setup fee but later they will find out that there will be a gateway fee, software fee etc.

Many times merchant account scammers even try to justify all these charges. Business owners need to be wary of ads that might lead to merchant account scams. Merchant account scam ads may boast about:

  • Minimum Prices - these companies boast about the lowest fees.
  • No Setup fees - they will usually have other fees where they will charge you extra.
  • Immediate Activation - after you have signed up, they might ask you for more money to transfer payments or have certain limitations on server.
  • Free Merchant Account - there is no such thing! There will be hidden fees.
  • Reward - be wary of ads that boast giving away cash rewards. They might just be refunding your money later and calling it a reward.
  • 24 Hours Customer Service - make sure you check this out before signup. Merchant account scammers will not have this service.

How to avoid Merchant Account Scam

  • Read - Merchants must never forget to read the fine print on the websites and in the agreements before signing up.
  • Inquire- they must not forget to call the 800 numbers and make appropriate queries.
  • Research - Business owners must conduct a through research for the validity of such deals and industry.
  • Discuss -in order to avoid merchant account scam, business owners need to talk to someone who has had years of experience in the same field.

If it seems too good to be true then it's probably a merchant account scam!