Questions to Ask Credit Card Processing Companies
Questions for a merchant services sales call: how the pricing is built, which fees appear on the monthly statement, contract length and exit terms, reserves and chargebacks, how fast money arrives, and who answers the phone when the terminal stops working.
The questions
Open any question for the note
Is your pricing interchange-plus, tiered, or flat rate?
Why ask it
This one answer determines whether you can audit the bill at all. Interchange-plus separates the card networks' cost from the processor's markup; tiered pricing groups transactions into qualified and non-qualified buckets whose definitions the processor controls.
What is your markup over interchange, in basis points and cents per transaction?
Why ask it
Ask for both numbers, because a low percentage with a high per-item fee is expensive if your average ticket is small. A salesperson who will only quote a single blended rate is quoting something you cannot compare with a rival's quote.
What monthly fees will appear on the statement: gateway, PCI, statement, minimum, batch?
Why ask it
Fixed monthly charges often exceed the rate difference between two providers, especially at low volume. Ask them to list every recurring line item by name and amount, then check it against your first real statement.
How long is the contract, and is there an early termination fee?
Why ask it
Three-year terms with automatic renewal and a termination fee are still common in this industry. Ask what triggers the fee, how the renewal notice period works, and whether the fee is a flat amount or liquidated damages tied to projected volume.
Am I signing with you, or with a processor you resell for?
Why ask it
Many sellers are independent sales organizations sitting on top of someone else's platform. It matters because the underwriting, the funding, and the support may all belong to a company whose name is not on the business card.
Is there an equipment lease anywhere in this agreement?
Why ask it
Terminal leases are frequently separate contracts, sometimes non-cancellable, and can cost several times the purchase price of the hardware over the term. Ask what the terminal costs to buy outright and compare.
How quickly do funds reach my bank, and what is the cutoff time for a batch to count as same day?
Why ask it
Next business day funding means nothing without the cutoff, so a restaurant closing at eleven may find its batch lands two days later. Ask about weekends, holidays, and whether your own bank adds a day.
Will you hold a reserve on my deposits, and under what conditions can you start one?
Why ask it
Underwriting can impose a rolling reserve, holding a percentage of sales for months, and the contract usually allows it to be added later. Ask what would trigger one, how it is released, and get the terms before you switch.
What is your chargeback fee, and what do you actually do to help me fight one?
Why ask it
Everyone charges a per-chargeback fee; the difference is whether you get a portal with deadlines and document templates or an email address. Ask what evidence they submit on your behalf and what your win rate looks like for merchants like you.
What happens to my effective rate when interchange changes or my card mix shifts?
Why ask it
The card networks adjust interchange periodically, and rewards cards cost more than basic debit. Ask whether their markup is contractually fixed, and whether they have ever passed on more than the interchange change itself.
How does PCI compliance work here, and is there a fee if I fall out of compliance?
Why ask it
Non-compliance fees can be billed monthly until a self-assessment questionnaire is filed, and many merchants pay them for a year without noticing. Ask who reminds you, who helps with the questionnaire, and what the fee is.
Which transactions cost me more: rewards cards, corporate cards, keyed-in sales, international cards?
Why ask it
Interchange varies by card type and by how the card is presented, so a business taking phone orders pays more than one tapping cards in person. Ask them to price against your real mix rather than a generic example.
Do you support surcharging or a cash discount program, and is it permitted where I operate?
Why ask it
Card network rules and state law both bear on this, and the rules have changed several times. Ask what they support technically, what disclosure the terminal must display, and confirm the legal position for your own state rather than relying on the sales call.
How does your terminal or gateway connect to my point of sale and accounting software?
Why ask it
A cheap rate is poor value if it means retyping every day's takings. Ask for the specific integration by name and version, and whether it is built by them or by a third party who charges separately.
What happens when the internet goes down mid-service?
Why ask it
Some terminals store and forward offline, some cellular backup is included and some is a monthly add-on, and some setups simply stop taking cards. Ask what the failure mode is and what the workaround costs.
Who answers the phone at eight on a Saturday evening, and where are they?
Why ask it
Support quality only matters at the worst possible moment. Ask for the support number and call it before you sign, then note how long it takes to reach a person who can look up an account.
What are my limits: monthly volume, maximum single transaction, and what happens if I exceed them?
Why ask it
Approved limits sit in the underwriting file and exceeding them can freeze funds without warning. If you have a seasonal peak or an unusually large sale coming, tell them now and get the higher limit written down.
If I leave, how do I get my customers' stored card details out?
Why ask it
Recurring billing is where switching costs hide, because tokenized card data usually belongs to the processor. Ask whether they will support a token migration to another provider, and get the answer in writing before you load a subscription base.
Will you analyze my last three statements and put your quote in writing against them?
Why ask it
This turns a sales pitch into a comparable number: total fees divided by total volume, your effective rate. A seller who will not commit their pricing to paper against your real statements is expecting the first bill to differ from the pitch.
What in this agreement can change without my agreement?
Why ask it
Most merchant agreements allow fee changes on notice, and that clause is where surprise increases come from. Ask them to show you the clause, the notice period, and what your options are when it is used.
Choosing a payment processor
Practical guidance for the conversation itself
Comparing quotes on the same basis
Work in effective rate
Take total fees for a month and divide by total card volume. That single percentage is the only figure that lets you compare an interchange-plus quote with a flat-rate one, and it includes the fixed monthly charges the rate sheet leaves out.
Price against your own mix
Give each provider the same three statements: your volume, average ticket, card types, and how transactions are taken. A quote built on a generic example will not survive your actual business.
Model your worst month and your best
Monthly minimums bite in the slow season and percentage fees bite in the peak. Check both ends rather than the average.
Ask for these documents before signing
- The full merchant agreement and the program guide it references, not just the one-page application.
- A written fee schedule listing every recurring and per-event fee by name.
- Any equipment lease as a separate document, with its total cost over the term stated.
- The termination clause, the term length, and the auto-renewal notice period.
- The reserve and funding-hold provisions.
- Their written quote priced against your last three statements.
Checks worth doing yourself
- 1Call the support line at the hour you would actually need it and time how long it takes to reach a person.
- 2Search the company name alongside the words complaint and lawsuit, and read the pattern rather than the outliers.
- 3Ask the seller who the underlying processor is, then look that company up separately.
- 4Ask another business in your trade what they pay and what went wrong for them.
- 5Once live, reconcile your first statement line by line against the written fee schedule, and query anything unlisted in the first month.
Where merchants lose money
- Choosing on the headline rate while ignoring monthly minimums, statement fees, and PCI charges.
- Signing a terminal lease bundled into the same conversation as the processing agreement.
- Missing the auto-renewal notice window, which restarts the term and the termination fee.
- Paying a monthly non-compliance fee for months because nobody filed the self-assessment questionnaire.
- Building a subscription business on stored cards without first establishing whether the tokens can be migrated out.
- Taking a verbal promise about rates or fee waivers that appears nowhere in the agreement.