The Great Merchant Account Rip Off Continues

November 15, 2016
TLDR;

If you’d like to have your statements analyzed to see how bad (or good?) your merchant account is, go here now.

Last year, I helped about 30 gym owners go thru their merchant account statements (results/findings were posted here). Our goal in this is simple: Help gyms owners realize exactly what’s going on with their merchant accounts by explaining - in plain english - what they’re paying.

Merchant account statements, and all the ways they charge you are purposefully confusing. The more confusing - the more ways they can hide fees - and the less likely you will be able to figure it out.

Here we are one year later, and from the sample of gym owners I ran this year, I think things actually got WORSE.

Here’s a snapshot of the findings:

  • Everyone thought they were getting a great rate. None were. ZERO of the reviews I did were within one full percentage point of the rate they reported that they were quoted when signing up. Every review I did who submitted an original price quote had a rate under 2%. Every review I did had an actual rate of over 3%. In fact, most were close to 4%.
  • Everyone was paying over 3.25%. While most merchant sales people sell the lowest rate they possible might charge (what sticks in your head), the reality is you’re usually paying a much higher rate due to variable rates most owners ignore. On average the reviews I performed came in at 3.5375% including transaction fees.
  • Almost all had a plethora of hidden fees. This is the part that pisses me off. I saw numerous statements where it really looked like they were paying around 2% in fees, but hidden away were another 1.7% in fees, on average. These fees are hidden either directly to the bank statement or deeper in the merchant statement itself. For example AMEX shows up as a 1.69% fee on the merchant statement, but then another 1.71% would come thru billed directly to a bank statement!
  • Many had great variances from month to month. This one, for the life of me, makes no sense. Merchant accounts typically bill a rate based on the type of card it is. For instance a rewards card might run 2.8% while a debit card might run 2.2%. In this business we deal with the same people, who generally have one credit card on file. We all doing recurring billing, and generally the mix of cards used shouldn’t change drastically. I saw some statements vary in fees by as much as $150 month over month. This significant change in cash flow, for no real reason is concerning to me.
  • PushPress beat them, every time - except one. In literally every single review I did, from gyms of all make ups and sizes, PushPress beat them every time, except one. That one gym we didn’t come in at a lower price on was a massive gym with tremendous billing volume and a very savvy owner. He was on a system that continually was turning back 4.0% fees for the gyms we reviewed, but he was able to get 3.28% (We came in at 3.30% after transaction fees.. but at his volume that represented a decent annual amount).

All in all, after reviewing this year with last years, I would have to say nothing has changed. There’s still all kinds of sneaky stuff going on in the industry, and owners seem to remain oblivious to it, or accept it as ok.

If you would like to have your statement analyzed - feel free to head here and join in on the great experiment!

We at PushPress disagree with how the merchant account industry is run, that is why we partnered with Stripe, and Stripe alone. They don’t play games with the pricing, they don’t have sales people who stand to make financial gain the more they rip you off. They don’t have variable rates that change from month to month, and they don’t have a SINGLE hidden fee.

You can, at any time, understand your fees by doing one simple calculation:

(Total billed * 0.029) + (number of charges * 0.30).

It’s that simple.

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