Why There Are No Truly Free Merchant Accounts


Consider for a moment that one of your employees comes to you with what they consider to be a brilliant strategy: Stop charging for your product and give it away instead. When you question his logic, he insists that his approach will increase business tenfold. After all, just imagine all the customers you’d have when everything is free!

Is this employee due for a promotion or the unemployment line — or perhaps a class in Business Management 101?

Just as every merchant is in business to make a profit, so are the merchant account providers that they contract with to process their credit card transactions. Payment processors have expenses just like you do, including employee salaries and benefits, rent, utilities and other overhead costs. Suffice it to say, if a processor is truly offering free merchant accounts, they won’t be in business for very long.

Facts are facts: Like any other facet of doing business, credit card processing costs money. To stay in business, processors not only need to cover their costs, but to turn a profit as well. The fees associated with a merchant account are simply the cost of doing business with your processor, the credit card networks and the issuing banks. Luckily, the provider of your merchant account deals with the networks and banks so you don’t have to!

Merchant account rates and fees generally break down along these lines:

  • The discount rate accounts for the major chunk of processing fees. Included in the discount rate are interchange (set by the credit card companies and paid to the banks) and assessments paid to the credit card companies.
  • Transaction fees are incurred each time a credit or debit card is swiped, dipped or tapped, whether the sale is approved or not. These fees are lower for card-present transactions than for card-not-present transactions because there’s a lower risk of fraud when the cardholder is physically there for the sale.
  • Additional charges associated with merchant accounts may include fees for application, set-up, programming hardware and software, early termination, support services, monthly statements and chargebacks.

Some merchant account providers advertise free application, setup, hardware and software to attract your business, but they’ll still charge you all of the fees listed above, usually at a higher rate to make up the cost of what they’re supposedly giving away. Or they may scrimp on quality, setting you up with outdated hardware or software that may not meet all your requirements or PCI compliance standards.

The old saying “You get what you pay for” may be trite, but it’s true. Companies offering free merchant accounts often rely on hidden fees, “teaser rates” that soar over time, limited or no customer support and restricted access to your funds to make their money. Is “free” really worth the hassle?

At TransFirst®, we don’t think so. That’s why we won’t lure you in with false promises of a free merchant account. What we will do is work with you on a fair and professional basis to create a merchant account that meets all your processing needs. Talk to one of our trained representatives today to find out why “free” is not always what it’s cracked up to be!


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© 2016 Total System Services, Inc.®

All rights reserved worldwide. TSYS® and TransFirst® are
federally-registered U.S. service marks of Total System Services, Inc. TransFirst is a registered ISO/MSP of: Wells Fargo Bank, N.A., Walnut Creek, CA; Synovus Bank, Columbus, GA; and Deutsche Bank, New York, NY; for Visa® and MasterCard® transactions only. TSYS Merchant Solutions is a registered ISO/MSP of Wells Fargo Bank, N.A., Walnut Creek, CA and Synovus Bank, Columbus, GA.