My Merchant Account Blog

First Data Might Be Over Charging Merchants

Thursday, December 31, 2009

Unlike the post Some Basic Merchant Account Fees, I am not referring to First Data charging a merchant extra fees (like a cancellation fee, ACH deposit fee, mid-qualification rates, etc), I am actually referring to your transaction fee.  Most First Data resellers are posting 25¢ on their websites and quotes this fee on the phone.

However, when Mile High Merchant Accounts started offering their current merchants this First Data Special, they contacted us with this unfortunate discrepancy.  They noticed that merchants were not being charged 25¢, but 25.99¢.

This might not seem like a big deal, but if you are a current First Data merchant and processing 1,000 transactions a month - this comes to $9.90 extra than what your merchant account reseller explained to you and what was on your contract.  What's more - they took a look at the contract the merchant signed with First Data and saw the transaction rate being listed at 25¢.

As Mile High Merchant Accounts was pretty familiar with the First Data contracts and how they changed over the years, we contacted them to ask how First Data is being able to charge merchants than what is listed on the contract.  They explained that First Data changed the procedures how paper contracts were being prepared by its agents because some untrusting agents would change the price of certain things, like changing the monthly $10.00 to $20.00.  This would ensure the agent would make $10.00 extra each month.  The merchant could not do anything about it, since the merchant signed the contract.  We are not saying all First Data agents were doing this, but you can see how this would give First Data a bad impression on how it was handling its business.  We are hoping that attorneys will be able to review irregularity and possibly have a class action lawsuit against First Data. 

Not knowing how many merchants are paying this extra fee and guessing at a low rate of just 10,000 merchants, First Data is overcharging those merchants $99,000.00 a month.  This also makes us wonder if this is happening with other merchant account providers that rely on the LinkPoint / YourPay / First Data Global Gateway.  If so, a very small estimate would be 100,000 merchants, totaling $990,000 - almost $1 million a month.

My Merchant Account Blog is hoping that ALL First Data merchants will review their contracts and statements from First Data.  Consider changing to a provider like CDGCommerce, who is more understanding of small to medium sized businesses when it comes to these matters and sign up with a merchant account with Mile High Merchant Accounts.

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