Most business owners pick a payment processor by comparing two rates and going with the lower one. A year later they are paying more than they were before, they cannot get a person on the phone when a deposit is late, and nobody can explain what changed.
That is not a mistake you made. The rate is the one part of a processing offer that is easy to make look good, so the rate is the part you get shown.
I have been in payments since 2009, and the accounts that go badly almost never go badly because of the rate. They go badly because of something in the funding schedule, the contract, or the support structure that never came up in the sales conversation.
Here are the ten things I would check before I signed anything.
1. Is this a merchant account or an aggregator account?
This is the most important question on the list, and it is the one almost nobody asks.
An aggregator like Stripe, Square, or PayPal places your business inside one large merchant account shared with thousands of other businesses. Very little underwriting happens up front, which is why you can be taking payments the same afternoon. The review still happens. It just happens later, after money is already moving, and it happens without a conversation.
A dedicated merchant account puts your business through underwriting first, in your own name, with your own merchant ID. It takes longer to open. It is also much harder to lose overnight, because a person looked at your business before it went live and knows what your deposits are supposed to look like.
Both are real options built for different businesses. Just be clear about which one you are being sold. Here is what it looks like when an aggregator review goes against you.
2. What is your effective rate, not the advertised rate?
Your effective rate is total fees divided by total volume for the month. That is what you are actually paying, and it is the only number worth comparing between two offers.
An advertised rate applies to one card type under one set of conditions. A rewards card, a corporate card, or a keyed-in transaction all cost more than the number on the flyer. The rate itself makes up somewhere around a quarter of what a processing account costs you. The rest lives in monthly fees, per-item fees, and the mix of cards your customers happen to hand you.
Pull three months of statements, add up every fee, and divide by what you processed. If you are not sure what you are looking at, here is how to read your merchant statement. Then ask the new processor what that same number would have been under their pricing.
3. What are the fees underneath the rate?
Ask for the complete fee schedule in writing before you sign, not the summary page.
The ones worth asking about by name:
- Monthly statement fee
- Monthly minimum
- Batch fee
- Gateway fee
- Annual fee
- PCI compliance fee and PCI non-compliance fee
- Per-chargeback fee
Some of these are ordinary costs of running an account and some are easy to forget you agreed to. The PCI compliance fee is a good example of the first kind. We charge one too, usually ten to fifteen dollars a month depending on which processor sits behind the account. The point is not that the fee exists. The point is that you should know it exists, and know what it covers, before you sign anything.
You are not being difficult by asking for the whole list. A processor who will put it in writing is a processor who expects you to still be there in three years.
4. How fast do you get paid, and what is the cutoff?
Ask two specific things: what time the daily batch closes, and how many business days after that the money lands in your bank.
Those two answers decide whether a Friday afternoon sale funds on Monday or on Wednesday. If your business runs close to its cash, that gap matters more than a tenth of a percent on the rate. Ask about holiday weekends while you are at it, because that is when the difference shows up.
5. What happens when a deposit gets held?
Any processor can hold funds while it reviews a transaction, and it does not take anything unusual to trigger a review. A large ticket, a sudden jump in volume, or a new product line will do it.
So the question is not whether it can happen. The question is what happens next. Is there a person who can tell you why? Does the review have a timeline? Will anyone contact you, or will you find out because the deposit simply did not arrive?
Ask that before you sign, while the answer still costs the salesperson something.
6. Is there a reserve, and what are the release terms?
A reserve is a percentage of your deposits held back to cover chargebacks that have not happened yet. On high-risk accounts they are common, and they are not a punishment.
What matters is the terms. What percentage, how long each dollar is held, and when the reserve gets reviewed for release. A reserve with a defined review schedule is a normal business arrangement. A reserve with no stated release terms is money you may not see again.
7. What does the contract say about the term?
Read for four things: the length of the agreement, whether it renews on its own, the early termination fee, and whether the equipment is on a separate lease.
The equipment lease is the one that surprises people. It is frequently a different contract with a different company, it often runs longer than the processing agreement, and many of them cannot be cancelled. Ask for both documents, and ask whether you are buying the terminal or leasing it.
8. What happens when you get a chargeback?
Find out the chargeback fee, and find out whether anybody helps you respond.
Responding to a dispute means gathering the receipt, the delivery confirmation, the customer communication, and your policies, and submitting all of it inside a short window. The cardholder’s window is long. Visa generally allows up to 120 days from the transaction, and up to 540 days for certain reason codes involving future delivery. Yours is measured in days.
A processor who gives you a portal and a deadline is a very different arrangement from one where somebody helps you build the response. Ask which one you are getting.
9. Will this account still fit you in two years?
Ask what happens when your business changes. Adding a subscription plan, raising your average ticket, launching a new product line, or starting to sell internationally can all trigger a fresh look at your account.
Growth is one of the most common reasons an account gets reviewed, which is a strange thing to have to warn people about. Find out now whether the processor can support where you are going, or whether you will be filling out applications again in eighteen months.
10. Who is the actual person on your account?
Get a name. Then ask whether that person stays on your account after the sale closes, or whether you get handed to a general support queue.
Ask how long they have been in payments, and ask what happens to your account if they leave the company. The answer tells you whether you are buying a relationship or a login.
At EMS every account is managed by a Certified Payments Professional, and you keep the same rep for the life of the account. That is the part I would not compromise on, because every other item on this list gets easier when there is somebody who knows your business and answers the phone.
Frequently asked questions
What is the difference between a payment processor and a merchant account?
The merchant account is where your card sales sit before they are deposited into your bank. The processor is the company that moves each transaction between your customer’s bank and that account. With an aggregator, you are using somebody else’s merchant account. With a dedicated account, the merchant account is yours.
How do I know if my business is considered high risk?
High risk is about chargeback exposure, not character. Higher ticket sizes, subscription billing, delivery well after payment, and certain industries all make banks more cautious. It does not mean you did anything wrong. Here is the fuller explanation.
Can I switch processors in the middle of a contract?
Usually yes, though there may be an early termination fee, and an equipment lease normally continues on its own terms regardless. Read both agreements before you move and put the exit cost into the comparison. Sometimes the savings cover it. Sometimes waiting out the term is the better call.
How long does it take to open a merchant account?
Underwriting typically takes two to three days once your documents are in. At EMS there is no application fee, and 98% of qualifying businesses get approved. Every application is reviewed, so nobody can promise you an approval before that happens.
Not sure what you are paying right now?
Send me three months of statements and I will tell you what your effective rate actually is, which fees are ordinary and which ones are not, and whether your current setup still fits your business. The review is free, and if you are already in good shape, I will tell you that too.
Request a free statement review
About the author: Julie Franke is a Certified Payments Professional (CPP) and has led Electronic Merchant Services since 2015. She has worked in payments since 2009 and specializes in helping high-risk and high-ticket businesses get approved, stay approved, and keep their money moving. EMS has served business owners since 2001.