It happened again.  I had to tell someone that they signed a contract that they never should have signed.

Warning!  Read the Fine Print!

Warning! Read the Fine Print on a Contract!

I had a client who was using a Phone Swipe.  She had not business getting a regular processing account.  Her tickets were less than $20 on average and her volume wouldn’t even hit a few hundred in a month per her estimations.   She had some issues because her Tax ID didn’t match the name she entered (which is why you make sure they always match) and she  didn’t let me know.  (This is an issue she would have with any company if she didn’t have the information correct.)

A rep from a local competitor walked through her door and signed her up for regular account.  Remember, she didn’t have nearly enough sales to justify a regular account.   My heart sank – not because she wasn’t using me, but because I knew she had no idea what she signed.  She said she could get out of it at any time and that he was local.  He wouldn’t mislead her.  (This was especially important because she was planning on selling or closing her business by year’s end.)

I asked if she had her contract.  She did.  She repeated that she made sure she could get out of it at any time.  She asked.  She told him she wouldn’t have the business next year.  She is only paying $2 a month for the use of the machine.

“Did you ask what the Early Termination Fee was?”

“No.  He said I could get out of it.”

Upon review, I showed her where she was now obligated to pay $495 when she closed her account.  It was not on any of  the pages she signed.  It was in the booklet of the contract 2 pages behind.   They didn’t even call it an Early Termination Fee.  But there is was, 3 years or $495.  She had only read the pages she signed.  By the way, she is also going to be hit with a $25 minimum fee every month and probably PCI fees.  (The contract was very vague on this point.)

“But he said I could get out of it any time!”

“You can.  He just didn’t tell you it will cost you $500 to do it.  Did he tell you that you will have to pay a minimum of $25 a month?”

“No.  What????”

I know she felt like a sucker.  I’ve been there.  That’s why I’m so adamant about creating business owners who are  informed Merchant Services consumers.  I could tell the only thing fighting back the tears was the anger welling up inside her.  She was just as angry at herself as she was at the rep.

What are her options not that she signed a contract?

1)  Call up the rep and raise holy hell and hope he eats the charges and gets her out of the contract.  He knew she was possibly closing when he signed her up.  Call up the company if that fails and try again.  (She had a 30 day review period and she was about 20 days too late to exercise it.)  But she can threaten to report them to the BBB and the local Chamber of Commerce.

2)  Close her business and her business account and hope they don’t come after her.  More than likely, she will get a ding on her credit and have a collections agent calling her to get the money and she can potentially be black-balled from Merchant Services over it.  (Not really a good option any way you look at it.)

3) Sell the business and hopefully convince the new owner to take over the contract.  The owner may do it.  But she also will be committing to higher fees and percentages than I would have given.

4)  Pay $25 (Plus) a month for 3 years until her contract expires.

5)  Pay whatever is required to get out of the contract.



Rip-off Companies

Wow, I’ve heard my share of company horror stories.  I’ll go into detail in a later post.  What I want to quickly say is, before signing on a dotted line, enter the company name followed by scam or complaints.  If the Merchant Services company you are dealing with is notorious for ripping people off, you’ll see reports on them.   Also, check the BBB.  See if they have complaints.  I hate to say it, but there are a lot of really bad companies that are more than willing to get you on a technicality or flat out lie.   Want an example, check out what is being said about Payment Systems Corp.

Mobile Phones and PCI Security

This PDF describes what end-to-end encryption for mobile devices.  

Check out all the great classes from the Larimer County Small Business Development Center

I am really excited to teach classes on Credit Card Processing for Businesses and Non-Profits for the Small Business Development Center.

If you are a thinking of opening a business, or if you are business owner (even if you already accept credit cards), take this class!  It could pay you back in spades in saved fees and headaches.

In this class, you will learn how to:

  • When should you use something like a phone swipe versus a “real” merchant services account
  • Evaluate your statements for red flags and potential fee leaks (or hemorrhages)
  • What to watch for in your contracts before signing
  • How to avoid fraudulent charges
  • How to avoid charge-backs and what to do when you get one
  • What PCI is and why you should pay attention to it
  • The difference between Tier Pricing Structures and Interchange Plus
  • New technology and how it can affect your business
  • New industry fees and how they will affect your busines

Check out all the great classes available through Larimer County SBDC.

Visa FANF will affect many Non-Profits

Red Alert:  If you are a non-profit, you could be adversely affected by Visa’s new fees called FANF.   Read on to find out if you are affected.

What is FANF?

Fixed Acquirer Network Fee
On April 1, 2012, Visa initiated a new Fixed Acquirer Network Fee (“FANF”) assessed to acquirers on a merchant Taxpayer ID basis, which many processors started passing through to merchant’s in May 2012.

The new FANF charge will result in additional charges for all businesses that accept Visa credit and debit cards, regardless of who their merchant services provider is.  Here’s the rub:  It also will affect most Non-Profits!  It doesn’t matter what processor you use.  They may pass them on quarterly or monthly.  But they will pass them on.

How FANF rates are calculated Businesses

Separate FANF charges will be imposed on (i) merchants processing transactions where a cardholder is physically present (“CP Merchants”), with the exception of merchants primarily operating as Fast Food Restaurants and (ii) merchants processing transactions where a cardholder is not physically present (“CNP Merchants”), which shall include merchants acting as merchant aggregators for other merchants, or merchants primarily operating as Fast Food Restaurants (MCC 5814). If a merchant falls into both categories described above, the merchant will be charged the FANF charge and the MSP Network Fee as both a CP Merchant and a CNP Merchant. The MSP Network Fee will be charged to all CP Merchants and CNP Merchants regardless of the type of merchant.

For CP Merchants with less than 50% of their monthly Card Present sales volume from the High Volume Merchant Category Codes (“High Volume MCCs”) listed below, the FANF charges will be assessed on a per location basis, with fees ranging from $2.00 FANF per location per month for CP Merchants with one to three locations to over $24.00 per location per month for CP Merchants with more than 250 locations.

For CP Merchants with at least 50% of their monthly Card Present sales volume from the High Volume MCCs listed below, the FANF charges will be assessed on a per location basis, with fees ranging from $2.90 FANF per month for CP Merchants with one to three locations to over $5.00 FANF per location per month for CP Merchants with more than 20 locations.

How Charities and Non-Profits are affected by FANF 

When you set up your merchant account, you are given an assigned code within the system by your representative.  It is important to know if you have the right code entered to ensure you are accounted for correctly.

This is an explanation that just came through one of the processors I work with:

An exception to FANF involves the assignment of MCC 8398, and merchants must be eligible. Visa considers the following criteria to determine eligibility. If any of these conditions are not met or Visa should determine the merchants business model is more in line with another MCC, even if closely related to 8398, FANF applies. And if we misclassify a merchant, Visa may revisit these criteria for up to 2 years and bill back accordingly.

1. The Tax ID must be registered as a 501(c)(3) with the IRS

2. 50% or greater of the Visa volume is in MCC 8398

3. Merchant properly coded with the MCC 8398

So is your merchant 8398?

8398 – Charitable and Social Service Organizations
Merchants classified under this MCC are non-political fund-raising organizations (organizations engaged in soliciting contributions) and social service organizations engaged in social welfare services. This MCC includes advocacy groups, community organizations, and health agencies. Although Charitable and Social Service Organizations may conduct much of their business in a non-face-to-face manner, they are not considered direct marketing merchants because they do not directly solicit their business primarily through catalogs, brochures, telemarketing, etc. These merchants’ transactions should be classified under this MCC, but each card-not-present transaction must be identified with the appropriate mail/telephone order or electronic commerce indicator value.

And here are a few business types most often misclassified as MCC 8398:

8641 – Civic, Social, and Fraternal Associations

Merchants classified under this MCC are associations engaged in civic, social, or fraternal activities. This MCC includes alumni associations and clubs, booster clubs, businesspersons clubs, community membership clubs, fraternal lodges, fraternities and sororities, social clubs, veterans’ organizations, and youth associations.

8651 – Political Organizations

Merchants classified under this MCC are membership organizations that promote the interests of a national, state, or local political party or candidate. This MCC also includes political groups organized specifically to raise funds for a political party or individual candidate.

8661 – Religious Organizations

Merchants classified under this MCC are religious organizations that provide worship services, religious training or study, or religious activities. This MCC includes churches, convents, monasteries, shrines, temples, and synagogues, among others.

8675 – Automobile Associations

Merchants classified under this MCC are automobile as­sociations and clubs. These merchants provide a variety of special services to its members such as travel and road condition information, maps and guides, and special rates at restaurants, hotels, and at car rental agencies. These merchants often charge an annual membership fee.

8699 – Membership Organizations (Not Elsewhere Classified)

Merchants classified under this MCC are organizations or associations that cannot be classified by another, more specific, merchant category code. This MCC includes historical clubs, labor unions, poetry clubs, art councils, and tenant or condominium associations. This MCC does not include membership to health and athletic clubs; these merchants must be classified under MCC 7997—Membership Clubs (Sports, Recreation, Athletic), Country Clubs, and Private Golf Courses.

Take steps to protect your organization.  Make sure you are classified in the right category and be prepared to have fees assessed in addition to your regular ones should you not be an 8398 qualifying organization.

If you have any questions concerning your status, your billing, your options, I would be happy to review your current situation and offer a non-biased evaluation.

Lynda Colter-Bergh



We knew it wouldn’t be long before we saw the industry squirm around the Durbin Amendment that gave Merchants a break on Credit/Debit cards from the Big Banks.   On April 1, 2012 the bank card networks introduced new fees that will almost certainly be universally passed on to Merchants.

New MasterCard Fees

New Fees Alert

MasterCard Inc. is adding two new network fees and is expected to introduce a new debit interchange rate in the controversial small-ticket sector.

New Visa  Fees

The most significant fee is Visa Inc.’s new Fixed Acquirer Network Fee (FANF).   Merchants won’t actually be affected until July. The FANF is a monthly fee that will affect all merchants, but, will be collected quarterly.

These new fees are different than interchange in that they are booked as Visa’s own revenue instead of being paid to card issuers (Banks), like interchange.

Like everything else in Merchant Services, FANF is confusing and complicated so I’ll try to break it down to bite-sized pieces. The MCC  (VISA Merchant Category Classification Code) you are designated by plays a role in the amount of the FANF charged each month.

The main factor in determining the amount of the FANF is whether a business processes the majority of its transactions in a card present or card not present environment.

For card present businesses like retailers

The amount of the Fixed Acquirer Network Fee for card present businesses will be based on the number of locations.  Businesses with one location will be charged $2 – $2.90 a month, up to $85 a month for businesses with 4,000 or more locations.  Again, this will show up quarterly on your statement.

For card not present businesses like e-commerce operations

For card-not-present merchants, Third Party Merchant Aggregators1, and fast-food restaurants, the monthly fee will be assessed based on Visa volume and range from $2 for sales of $50 or less up to $40,000 for merchants with more than $400 million in gross sales. The fee table in this category reportedly has at least 16 tiers.

E-Commerce will be hit harder

A card-not-present business processing between $8,000 and $39,999 will be hit with a Fixed Acquirer Network Fee of $15 a month opposed to just $2 for a card present business with similar volume and one location.  (Remember, more locations, though means more fees.)


Visa will waive the FANF for charitable organizations classified under merchant category code 8398. Exactly how the fee will be waived isn’t quite clear at the moment, but early indications are that Visa will charge the FANF and then provide a rebate at a later date.

1Third party payments aggregation (TPPA) is a description used for merchants that are selling a product or service that they do not own. The best example of a TPPA (aggregator) is PayPal. They simply facilitate the exchange of money between two parties.

I can help you accept credit cards and checks for your non-profit

I just have some interesting experiences lately I’d like to share. I am working with a new Zonta chapter and we had a manager of a Refugee Center present to us. She handed out slips of paper that explained what $25 would buy for the center. At the end of the presentation, there was a bit of silence. She sort of asked for a donation. But the slips were geared towards sending money in and the address wasn’t posted. She left empty handed.

Ways to Receive Donations

My heart broke. I immediately contacted her about an amazing program that is spreading nationally and is starting out in our neck of the woods (Colorado) that would allow her to offer something to provide incentives to donate on the spot. It’s called NetGreenNow. (You can look them up.) I then talked to her about the power of being able to take donations right then and there through smart phones.

Flexibility and Ease of use are Essential

I showed her how we can create a link that can be put on her fundraising website, but could also be accessed from smart phones that not only allow people to immediately donate, but give them to donate via CC, personal check or business check at any amount and with a single donation or a monthly donation. They can even put a message of who it is in memory of. I asked her how it would have felt to be able at the end of the presentation to ask people to take out their cell phones and have them go to this website and ask them to give whatever they could to help out. What a change. Her eyes lit up!

Getting Donations from Facebook

Now, take it a step further. What if we could have sent that link to our family and friends in a text message or on facebook saying we had just witnessed something that meant so much to us and we felt was so helpful to our community that we wanted to ask them to also donate whatever they could. How powerful is that? This gives anyone the ability to feel like they are helping (even if they, themselves, don’t have the funds) and increases not only the chance to get donations, but spreads the word about the organization.

Getting Donations from Anywhere

I can even set it up so you can create multiple “portals” to allow you to track who is bring in what from where all securely with nothing more than a pc, tablet. or cell phone.

You may be able to add this service and save money!

So, how much will it cost? Well, possibly nothing because I can probably save you enough with your processing to pay for the service. I help non-profits keep as much from their donations as possible and offer out-of-the-box solutions to make their fundraising more lucrative.
Interested in learning more, then just get in touch with me.



Here you go…straight from Visa

Visa Warns Consumers about Retailer Checkout Fees

Visa Warns Consumers about Retailer Checkout Fees

What is a Checkout Fee?

A checkout fee, or payment card surcharge, is an unfair surprise fee that a retailer tacks onto a consumer’s bill when he or she uses a credit or debit card. Visa rules do not allow retailers to charge cardholders a checkout fee for using their cards, mirroring laws in 10 U.S. states. Read on to learn more.

How to Spot Checkout Fees
  • Look for signs or postings in the checkout line warning of the fee.
  • Carefully review receipts where checkout fees often appear next to product descriptions.

What to Do if You Are Charged Checkout Fees
  • Click here to report retailers that are charging checkout fees.
  • Checkout fees are also prohibited by law in 10 U.S. states. Consumers who are subjected to checkout fees in states where they are protected by law may report the retailer to their state attorney general’s office.
Retailers Can Offer a Discount for Cash and Check Purchases
Retailers can encourage their customers to use other forms of payment, such as cash and checks, and can discount for PIN debit and cash and checks provided that the offer is made to all respective buyers.

State No Surcharge Laws Protect Consumers

10 States also Protect Consumers with No Surcharge Laws

In 10 states it is prohibited by law for retailers to charge consumers a fee for using a credit card (California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas). Consumers who are subjected to checkout fees in states where they are protected by law may report the retailer to their state attorney general’s office.
Click a state below to read the laws on surcharging and find out where you can go if you suspect a violation.

State Laws & Attorney General Contact Information








New York




Check out this two minute video explaining the difference between Interchange Plus and Tier Pricing and how you can save money through Interchange Plus.

 Not all of Credit Card Merchant Services Reps are crooks.

Those Merchant Services Reps knocking on your door likely fall into one of three categories:

  • An experienced rep that wants to do the right thing and may or may not have the company to facilitate that.
  • A new rep, who desperately needs to not be thrown out the door – if for no other reason than to give hope that someone will at least listen. (High failure rate because we don’t make as much as you think we do.)
  • The crooks. (Yes, they do exist.)

So how do you tell the difference?

Signs of a good Rep.

  • Do they look you in the eye? Watch their body language. How do you feel with them?
  • Do they listen to your needs first before selling you a solution?
  • Do they explain why you are paying what you are paying and how they can help?
  • Do they focus on customer service and price?
  • Do they let you review the contract before signing it?
  • Do they push leasing equipment? (I hope not.) Do they offer it for special circumstance? (I hope so.)
  • Do they openly discuss ALL fees.
  • Do they want to put you on Tiered pricing or do they talk about Interchange Plus? (Go Interchange.)
  • Do they encourage you to monitor your statements? (They should.)
  • Do they follow up with you and offer reviews or do they disappear after the sale? May not be a crook, but you may want to at least get an annual review from someone to make sure you have a good deal.

How to spot a crooked Rep.

  • Do they tell you can get you one great rate? (Don’t let door hit them on the way out.)
  • Do they give you time to review the contract or pressure you to sign on the dotted line.
  • Does it sound too good to be true? Does that spidey sense go up? Ask for references you can call.
  • Do you like them? Again, your intuition will tell you a lot.
  • Do they avoid the discussion on fees?
  • Do they try to push the purchase of expensive equipment, or worse “Help you” by pushing a Lease.

One final note…

When someone walks in your door, give the benefit of the doubt. Unless you have established that you have a great deal, they may be able to save you money. If you know you have a great deal and you are happy with who you work with. Just tell them that you have verified you have a great deal with others and that you are happy with your provider.

Remember that they are more than likely not a crook. They are trying to earn a living and put food on their table and they are doing that by trying to save you money.

Even if you are in a contract, if you don’t know if you have a good rate. If you’ve never had contact after your sale from your rep, you owe it to your bottom line to pick one that you jive with and let them have a few minutes and see if they may be a good fit. Do this even if you are under a contract. You never know. They may just save you enough money in the first few months to pay for getting out of it. Then money returned to you.

After all, it’s not what you get, it’s what you net!

Lynda Colter-Bergh  970-235-0064   lynda@myCCMS.net