How important is issuing bank?

[scarlettscloset]

We have reviewed rates and contracts for more than half a dozen credit card processors. The sales pitches are great. When I lift the hood to find out the bank we will be involved with, I seem to come up with some pretty slippery characters.

Also I find discrepancies between the promise and the actual merchant agreement. For example, one ISO states that their rates on all transactions is the same. It's very reasonable and incurs no surcharges for international transactions.

The bank agreement with Merrick Bank states that "they will determine all rates, fees and charges and notify Merchant of the approved fees and by Merchant's submission and acceptance of Merchant's first settled transaction, Merchant agrees to pay such approved fees"

Maybe I'm just being paranoid, but it sounds to me like, it will be what we say so and if you accept settlement then you are bound to these fees whether you like it or don't.

Am I just being paranoid? How important are the issuing banks in this deal?

[stymiee]

I wouldn't say you are being paranoid. i would say you are being diligent. To me it sounds like you had a dishonest sales agent.

Unless you get a specific contract that says you will be paying one rate for all transactions you will see different rates for different transactions just like 99.99% of the merchants who are accepting credit cards. This is normal. What should happen is you will have a base rate, called a qualified rate, that should apply to the vast majority of your transactions. Then you will have some transactions be charged a higher rate based on certain criteria such as they are special credit card (rewards card, business card, etc) or how the transaction was run (keyed instead of swiped, no AVS performed, etc).

When looking for a provider it is important to find out these rates as they clearly will affect your business. Our Merchant Account Comparison Worksheet is designed to help flush out these fee for you. As always, if you get a sales agent that says something that sounds too good to be true, make sure you get it in writing.
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John Conde

[scarlettscloset]

Is the reputation of the issuing bank relevant to its merchant card services?

For example Merrick Bank has a bad reputation in terms of how it handles security and demonstrates egregious policies in terms of consumer credit card rates.

What would you do?

[stymiee]

You're not going to find a bank with a bad reputation in this industry. Visa and MasterCard regulate them heavily and if a bank can't get their act together they will lose the ability to process Visa and/or MasterCard. They've done this to banks before and will certainly do it again.

Your main concern should be with the sales agent/company soliciting you directly. They are the ones who have a tendency to be dishonest and problematic much more so then the banks.
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John Conde