Federated Payments Review

Overall Rating Breakdown
Sales & Marketing Tactics
Costs & Contract Terms
Complaints & Service
BBB Rating

Federated Payments

"C" Credit Card Processor Rating
Last Updated: January 21, 2014

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Federated Payments Overview

Federated Payments Logo

Federated Payments Logo

Federated Payments (federatedpayments.com) is a merchant account provider that also offers a variety of other merchant services. Among its offerings, Federated Payments provides merchants the means to process credit & debit cards, gift cards, loyalty programs, and electronic checks, and e-commerce solutions provided by SafePay. The company serves most merchant types and can also supply a variety of processing hardware.

Federated Payments is sponsored by Deutsche Bank AG, New York, as its Acquiring Bank. Sources indicate the company has been in business since 1999 and is based in Melville, New York.

Federated Payments Sales & Marketing Tactics | D

Federated Payments appears to utilize telemarketing and hiring of independent sales agents to market its services. This “hiring mill” model often produces agents who are trained to sign merchants to the most expensive contracts possible in order to receive a higher commission. In fact, many of the complaints filed publicly against Federated Payments appear to have been written by employees who are dissatisfied with the company’s policies and their compensation. This is an indicator of a less-than-positive corporate culture.

In addition, the company’s website promotes a $500 price-matching guarantee that promises to give a merchant $500 if they can find a competitor who offers lower rates for the same product and contract terms. Judging from the company’s website and several complaints filed online, it seems as if merchants must first sign a contract with Federated Payments, and if they can then find better pricing from a competitor within 30 days, the $500 amount is awarded in the form of Federated Payments waiving their early termination fee. Due to some complaints reporting confusion about how this works, merchants are advised to seek clarification about this guarantee before agreeing to it.

Federated Payments Costs & Contract Terms | C

Federated Payments appears to offer standard rates and fees, including a monthly statement fee of $5.95 and an early termination fee of $500. These figures are about average for the industry. Some complaints report a standard contract length of three years, but given the company’s apparent strategy of employing independent sales agents, contract terms are likely to vary from agent to agent. Merchants are advised to keep in mind that a number of contract terms are often subject to alteration at the discretion of the agent.

Federated Payments Complaints & Service | C-

Federated Payments has appeared as the subject of roughly 35 complaints on this and other customer protection websites concerning allegations of fraudulent practices, employment issues, or misrepresentation. Many of these complaints appear to have been authored by former or current employees and agents of Federated Payments, who report unethical business practices and meager compensation for their work. This is a troubling trend that would seem to indicate a failure by the company to resolve matters in-house.

Complaints by merchants tend to cite undisclosed fees, unavailable agents, and confusion over the $500 guarantee. Some of these complaints have received rebuttals from the company’s representatives. The company’s website lists numerous dedicated support phone lines on its “Contact Us” page.

Federated Payments BBB Report | B- (CPO Adjusted)

Federated Payments scores an “A+” rating with the Better Business Bureau (BBB) and is not accredited at this time. Within the last three years 55 complaints have been filed against the company, which is down from 58 as of our last update. The majority of the complaints concern problems with services or products and sales or advertising issues, with billing and collection problems coming in third. Of the 55 complaints, 48 were resolved to the satisfaction of the complainant with the assistance of the BBB. The BBB found that Federated Payments responded appropriately by making a good faith effort to resolve the remaining 7 complaints, but the merchants remained dissatisfied. In light of these figures, we have adjusted the BBB’s rating to a “B-.”

Bottom Line

Federated Payments rates as a typical merchant account provider according to our standards. The company can improve its rating by reducing the number of complaints filed by its own employees, offering more competitive contract terms, and listing those terms more transparently. Merchants are advised to carefully scrutinize the terms of any contract they are given, especially with regard to the advertised $500 guarantee.

Leave your review of Federated Payments in the comment section below:

Federated Payments Review

Rated 2.125 Out of 5 Stars
Reviewed by Phillip Parker
Reviewed on 2014-01-21 11:27:57

UPDATED: Jan 21, 2014 – There are roughly 90 negative Federated Payments reviews online, may of which have been filed by former employees who describe the company as a scam… Federated Payments (federatedpayments.com) rates as an average merchant account provider according to our standards. The company can improve its rating by reducing the number of complaints filed by its own employees as well as… Learn more in this Federated Payments review.

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About the author

Phillip Parker

Phillip Parker is a former merchant services agent turned small business advocate and the author of "Fee Sweep," which teaches merchants how to dramatically lower their processing rates, eliminate junk fees, and avoid fine-print scams. He founded CardPaymentOptions.com to help merchants enact positive change in the credit card processing industry.

Phillip can help you find an ethical and honest processor that will offer you great rates. Click here to request a free provider consultation.

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  1. John

    I worked for this company as a inside sales rep for 2 weeks and they were the longest 2 weeks of my life. They are a bunch of fast talking con artists. My job was to contact merchants after an outside rep was not able to close a deal and try to close again as a corporate director from the home office who could give the merchant an exceptional rate. Problem was All of the merchants were so pissed at us that either they hung up or wanted to curse me out. The outside reps would not show at their appointments or would lie to the merchants about anything and everything. This is a boiler room operation from the get go. I’ve been in sales a while so I saw the writing on the wall and got out after I got my first check. If I quit before then I knew without a doubt they wouldn’t have paid me. Run and hide from this place. A job like this will kill you.

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