Merchant (So-Called) "Services"

One perk of being a one-man business is that nobody ever questions your decisions. The flipside is that nobody helps you make them. That can paralyze a cautious person like me until something forces me to act. 

The CDG Commerce situation that I wrote about last week has reached the action point. I still can’t access their transparent gateway and their tech support stopped answering my emails. Transaction confirmation emails have become sporadic, so I often have to log onto their website to see which card was used before I can enter transactions in Quickbooks. (And their annoying password requirement means I have to copy and paste my gibberish password every time I log on.) Bank deposits don’t match batch results anymore; the money finds its way into checking eventually, but bookkeeping has gotten difficult. Thursday morning I lost a $25 sale to their gateway’s confirmation screen. It’s probably no coincidence that at least 75% of my sales are going through PayPal now.

Credit card processing, or “merchant services” as the industry styles itself, is an arcane business that performs a simple function. The heart of their service is just an automated process. Here’s a life lesson for you: The more complicated a business’s pricing structure, the more negotiable its prices are. 

After negotiating with RBS WorldPay all week I haggled their discount rates down to just 1.59% plus 10 cents per transaction (2.0% for reward cards and 2.89% for Amex), with a $25 monthly fee and $50 annual fee. The cancellation fees are steep: $295 in year one, $195 in year two, and $95 in year three of their contract…but I’m not one to jump from one company to the next unless something goes seriously wrong; three years seems reasonable to me. Unfortunately their contracts auto-renew every year, giving you only 30 days to cancel penalty-free.

Here’s a corollary to the earlier life lesson: The more complex a business’s price structure, the sleazier its practices. I decided to read web reviews before tying the knot with WorldPay. One professional reviewer gave them a respectable four out of five stars, but scores of customer reviews warn people away urgently, accusing them of arbitrarily raising fees during the contract period, having terrible customer support, and being generally dishonest and untrustworthy. Should I ignore all the warnings and assume that the overwhelming majority of their customers are satisfied (reviews are usually written by the disgruntled, after all)? Or consider myself warned and start my search over? 

I confronted their salesperson with all the bad reviews. She gave me her word that I would not be charged any fees beyond what was already disclosed. With that in writing, I decided this morning to commit. 

An hour later -- before I followed through on that decision -- PayPal called to solicit my credit card business. PayPal charges a straight 2.2% + 30 cents for all transactions with no monthly fees, no contract, and no cancellation fees. Now I need to run some comparison numbers and research PayPal’s reputation before I can commit. I think that WorldPay will have an edge at higher volumes (lower cost per transaction will make up for the $25 fixed cost) and PayPal will make out better during the slowest months (no fixed cost, higher per-transaction fees). 

I wish I had somebody to talk this over with. My brain is starting to seize up every time I think about it. But I need to make a call by Monday.