Whether we’re talking about bikes, watches, clothes or any product or service, why is it that some cost more than others?
The common belief in the marketplace is that it’s due to two main things: the quality/durability of the materials used, and the craftsmanship that goes into assembling the product.
But is this really the case?
The illusion of value, and why we all buy into it
In reality, any true marketer will tell you that the correct selling price that a company gives will come down to the perception of value that the marketplace has for the company or brand that is doing the selling.
McDonald’s will never be able to sell a $40 hamburger. Why? Because the perception in the marketplace is that they have a fast and cheap offering. In fact, that is what they are famous for and attempting to sell a high priced gourmet burger would be sure to fail, or that the very least confuse the market.
Likewise, Tiffany’s would be ill-advised to sell a silver bracelet for that same $40 as the perception they have in the marketplace is one of exclusivity, where clients expect to pay a high price in order to join a relatively elite group of people who can afford their products.
Merchant account processing is no different, except none of your friends are going to be impressed with the pedigree of your merchant account provider. Incidentally they will be impressed with how they are treated as a customer, but that’s a different (but related) story.
So let’s forget about branding and market position, and get down to brass tacks by focusing solely on how the different offerings compare to the prices being quoted.
It comes down to a game of smoke and mirrors
All merchant account providers function at different levels of quality, with varying reputations for effective customer support. Depending on what the provider makes available to you and how renowned their services are, you can expect their rates to be higher or lower.
A provider that attains a high standard which raises their services to a higher value usually cultivated over years of experience with trial and error and in-depth research on successful business practices; and this is because many of their team members were or are successful merchants, just like you. So, not only do they know what you need, they also have a good sense of extra features you’re likely to benefit from that you might not have considered.
An important thing to keep in mind, however, is that it’s not just the practical services you’d be paying top dollar for – in many cases, it’s the brand and general perception of the brand’s value that allows them to validate their higher rates and extra fees.
Different providers develop original utilities – such as powerful POS systems, and transaction and customer information security solutions – which set them apart from their competitors, giving you certain unique advantages.
These features are unique, and by paying more to have access to them, you’re getting a leg up on the competition with a more practical toolkit.
Or so they would have you believe.
The mystery fees you don’t even realize you’re paying
The reasons why they charge more might not always have such a practical application. According to Ronnie Lynch, Enablepay’s regional sales director, “Many ISOs (Independent Service Operators) who offer good merchant service schedules make their real money in surprise fees” – fees like PCI non-compliance payments or annual transaction reports.
This type of information reveals the fact that going straight for the most prestigious merchant account providers around should not be your way of deducing your best options. In other words, don’t just buy with the masses, buy from those companies that are able to provide you with top of the line service for a reasonable rate and fees.
While the brand itself might be well-known, a look under the hood might reveal a myriad of fees that you don’t want to have to deal with, along with numerous features that you won’t ever find a use for. In contrast, a lesser-known provider with customer satisfaction at the forefront of their business policy may do a better job looking out for your best interest, being completely transparent with any fees you’ll need to pay while offering you the bare essentials necessary to get the ball rolling.
Out with the parlor tricks, in with the reality check
Merchant account providers that charge more and enjoy widespread acclaim are not always the go-to solutions they’re cracked up to be. Sometimes, joining what feels like an elite club can result in paying extra fees for reasons that are both unfounded and unnecessary.
Don’t be swayed towards the more prestigious providers without using sound judgement first; thoroughly analyze the policies of the providers you come across, and make sure you get treated like the valued business partner that they’re supposed to treat you as.