IMPORTANT NOTE: All of the above are required by any legitimate processor.

Of the regulations listed, the most important is returned merchandise and refund policy. If a merchant does not allow refunds, such must be clearly stated as "All Sales Final" or a similarly stated policy. If a merchant has a time limit on refunds, 30 days for example, such must be clearly stated.

The refund policy must be clear, concise and easy to understand. A policy that is difficult to comprehend, has a vague lengthy path to follow in order for returns to be honored and/or has several unnecessary 'hoops' for the consumer to jump through to obtain a refund, is not at all acceptable to either VISA or MasterCard.

Processing Banks often require refund and return policies to be rewritten until they meet with what the particular bank considers to be in compliance with the card processing regulations. Refund policies must be likewise clearly stated on marketing literature for Mail-order processing accounts.

An Industry Trick It Would Be Wise To Avoid! In the card processing industry, the most important part of a merchant account contract is the "Terms of Agreement"; i.e., how long you as a merchant are required to remain with this particular source without incurring a substantial penalty.

Any term agreement longer than thirty days (month-to-month) is a very unwise business decision for the unsuspecting merchant unless you obtain a written guarantee that your rates will not be raised during the length of the term, whether it be one, two or three years. It should be noted here that rate guarantees, although often not stating thus, do not apply to interchange raises; i.e., if VISA and/or MasterCard raise the rates they charge banks, ALL sources go up accordingly, regardless of what any company or agent has told you to the contrary.

Term Agreements are the number one cause for merchant anger and frustration in our industry, and unless you have written assurance of a rate guarantee for the entire duration of the term, such an agreement should be avoided at all costs.

If your agent representative does not mention term agreements or bother to show you in writing the specific length (term) of the contract commitment, then you should run from this agent and never look back! The very best advice we can offer, which is too often ignored, is for you the merchant to compel your agent to show you, in writing within the contract he or she is asking you to sign, the length of your contract commitment and your penalties for early termination.

Why is this so important? Simply put, many banks and processors (even some very large ones) have purposely devised a very deliberately deceiving merchant account program that offers initial rates that are below the legitimate competition.

Once they have an unsuspecting merchant signed into a long-term commitment, the rates begin to rise, usually in small increments. Over time, that initial rate of 1.59% can become 2.49% or even higher. When the merchant attempts to switch to another processor, he or she finds it will cost several hundred and sometimes thousands of dollars to get out of the contract term early.

Off-Brand Equipment There are three brands of credit card processing equipment that can be used by the majority of major US processors: Nurit (Lipman USA), Hypercom and Verifone. By the end of the year 2000, it is projected that the networks of all major processors will support these three brands. Purchasing equipment that is manufactured by companies other than these three (except software) is very risky at best. -----Obviously, if the terminal you invest in can only be used by one or a few processors, then you are at the long-term mercy of those processors regarding both rates & service. Marketing off-brand equipment that is only compatible with one or a few processing sources is a major industry trick. Regardless of the "deal" some slick agent is offering you on equipment, if that equipment is not one of the three major brands, then you are making an extremely unwise decision to purchase it... BUYER BEWARE!

Monthly and Hidden Fees That Inflate Your Bottom Line Following is a partial list of various fees used by banks and processors in our industry. While some of these fees may be legitimate, the vast majority are mere inventions used to pad deep pockets at the expense of unsuspecting merchants.

Robbing Peter to Pay Paul Many professional salespeople work under the following sales theory: "Charge as much as possible, regardless of how much, but nevertheless, some money is better than no money."

Under this theory, they will normally charge $50 to $80 per month for card processing equipment and then offer $29.50 for the same equipment if they come in behind a much more legitimate agent who quotes $30 to every merchant. Many companies train their agents to follow this type of sales theory religiously; i.e., charge whatever you can possibly charge, but do not come back without the sale, regardless of what it may cost you. These same agents and the bosses they work for treat rates and monthly fees in much the same manner.

Agents who have been around for while know how to take advantage of a merchant who is looking to squeeze 50 cents from a legitimate offer. Some agents will lower the equipment price and raise your keyed rates or statement fee to compensate. Then again, they may do just the opposite; lowering your rates and raising your equipment cost or application and setup cost. What rates, fees and equipment prices they offer are situational, dictated by each situation based upon where you the merchant's main objection seems to lie.

"Always Watch The Bottom-Line": Seems simply enough, yet in our experience, we have seen large corporations, high volume independent merchants on down to very small volume single-location merchants talked into a very bad deal that has been made to appear slightly better than a previous legitimate offer.

Which product and service companies you as a merchant ultimately choose should be dictated in part by the ethics, honesty and integrity of the salespeople and company you are dealing with, not just by the least expensive offer. What kind of ongoing service and fair treatment regarding a continuing low rate do you expect to receive from a company that allows their agent to lower the initial cost to you by more than 50%? Remember that when you set up for a merchant account, your long-term cost and quality of service should also be major considerations.

Unethical and Poorly Trained Sales Agents Some companies in the card processing industry go to great lengths to NOT train their sales representatives very well, the theory being that if their agents do not know much about keyed rates, business and commercial card rates, batch fees and other hidden charges, then they will appear honest and ethical to the unsuspecting merchant while signing them into an expensive, oversimplified, program accordingly.

Other companies train agents to deceive merchants in every way possible--sometimes directly, but more often as not, by omission; i.e., the agent will deliberately fail to mention all of the types of charges and fees you will ultimately be billed for and most often, fail to discuss the length of your contract term agreement and your penalties for early termination.

The former type of agent, one who hasn't been trained very well, will often sincerely insist that their company charges only one rate for all types of transactions (which no processing bank does) and will just as sincerely never bring up hidden charges, such as batch header fees, annual fees and the cost of getting out of a lengthy term agreement. The latter type agent of course, will deliberately omit discussing what he or she is not specifically asked.

All processing banks are charged more if the transaction is "keyed-in" rather than physically swiped and all are charged more if the card is a commercial card, foreign card, business or corporate card.

They are also charged more if you carry a transaction over longer than 24 hours, such as a pre/post authorization transaction.

If an agent does not discuss "Qualified", "Partial-Non Qualified", "Non-Qualified" and "Standard" category rate charges, then you are dealing with either a poorly trained agent or a highly unethical one. In either case, you should quickly show them the door.

A legitimate sales presentation for merchant accounts should include discussion of all of the above rate categories, the term agreement of your contract, equipment service & guarantee issues, monthly fees such as statement fee, minimum fee, batch-header fee, annual fee, voice authorization fee, terminal maintenance, debit statement fee and long-term rate expectations.

You the merchant should always specifically ask if there are any other costs not discussed and you should know that there may be charges that the agent is not aware of. Remember, if you do not ask, chances are very good that the agent representative will not tell you

AS ALWAYS, BUYER BEWARE!

We hope to have answered your questions regarding Merchant Accounts. Let us know if you have specific questions. We are here to help.