First Data Overall Rating
Last Updated: January 9, 2014
First Data Overview
First Data Corporation (firstdata.com) is a large electronic payment processing company headquartered in Atlanta, Georgia. The main bread and butter of this company is providing back end card processing services to Independent Sales Organizations (ISOs), banks and other merchant account providers. As one of the largest payment processors in the industry, First Data’s (FDIS) offerings include merchant account processing services for credit and debit cards, private-label cards, gift cards, payroll, and other prepaid card offerings. The company also offers various other services including fraud protection and authentication solutions, and electronic check acceptance services through TeleCheck.
Unlike most merchant account sales organizations, First Data is a direct processor with Visa & MasterCard. While the company does have a small direct sales force, First Data relies primarily upon partnerships with third party resellers and sub-ISOs to sell its credit card processing services. Two of these resellers include a couple of the largest banks in the United States, Wells Fargo Merchant Services and Bank of America Merchant Services. These two partnerships along with thousands of others make First Data one of the largest, if not the largest, processor in the world. In fact, it is said that nearly 3 out of 4 credit card sales in the U.S. are processed by First Data.
First Data Sales & Marketing Tactics | C-
|Key Points – Sales & Marketing|
|Uses independent resellers?||Yes|
|Promotes deceptive rate quotes?||No|
|Fails to disclose all terms?||Yes|
As stated earlier, First Data primarily markets its services through an army of resellers and partners. The company has its own direct sales offices, but they make up a tiny fraction of First Data’s overall sales force. The company has suffered considerable damage to its reputation due to many of its resellers using misleading sales tactics and deceptive marketing. First Data appears to do a poor job of policing its ISOs and eliminating bad partners.
Aside from its heavy use of resellers, First Data does not appear to use misleading advertising or deceptive marketing through its own sales force; however, there are a considerable amount of complaints that suggest the use of deceptive sales practices among its agents. It appears that many agents fail to mention buried contract commitments, e.g. lease terms for point-of-sale equipment provided by First Data.
First Data Costs & Contract Terms | C
|Key Points – Costs & Contract Terms|
|Termination fee:||Up to $495|
|PCI compliance fee:||Variable|
|Equipment lease:||48 mos./non-cancellable|
As a direct processor, First Data sets wholesale rates slightly above Interchange and then allows resellers to markup the wholesale costs in order to sell credit card processing services to merchants at a profit. It’s a popular misconception that going directly to First Data, instead of a First Data reseller, will result in lower processing fees. In some cases working directly with First Data may result in rock-bottom rates (see “Fee Sweep” to learn how to negotiate for the best rates), but often the company’s direct sales channel is just as expensive its resellers.
Pricing and fees of a First Data merchant account will vary by reseller, agent, and merchant. First Data allows resellers to choose between selling month-to-month contracts or service agreements ranging from one to five years. Cancellation fees and contract conditions can vary widely by reseller, so merchants are advised to read their contracts carefully. Some merchants also report non-cancellable, multi-year leases for point-of-sale equipment offered by First Data Leasing. Generally speaking, First Data will enforce the contract terms set by a reseller as long as they fit within the company’s sales policies.
First Data Complaints & Service | D
|Key Points – Complaints & Service|
|Live customer support?||Yes|
|Most common complaint:||Hidden fees|
When it comes to customer service, First Data has the ability to service its merchant account customers directly via a 24/7 customer service call center, or resellers can provide their own customer service. First Data also offers customer support options for resellers at an additional cost to the reseller. In a few reviews, merchants have reported confusion regarding identifying the company responsible for servicing their account.
First Data has a high volume of complaints, with over 200 in the comment section below and over 300 on Ripoff Report. Most of these complaints report deceptive sales tactics used by some resellers and agents, poor customer service, inability to resolve disputes over billing and service commitments, and omissions of important contract terms prior to account setup. Additionally, several merchants who reported signing up through resellers stated that they were placed into contracts directly with First Data or into equipment leases without proper disclosure of important terms & conditions (for instance, non-cancellable leases for point-of-sale equipment). Customer service to resolve these issues may vary depending on which aspect of the contract requires attention.
[Related: Best Credit Card Processors for Service]
First Data BBB Report | D (CPO Adjusted)
|Key Points – BBB Report|
The Better Business Bureau (BBB) is clearly having difficulty distinguishing between First Data itself, its independent sales channels, and its resellers. There are numerous reports on the BBB website that are clearly just resellers of First Data, yet the BBB attributes the page to First Data. On the actual report attributed to First Data, the BBB awards an “A+” rating. The high grade is surprising considering that the report lists 810 complaints in the last 36 months (up from 729 since our last review). The majority of complaints are due to billing and collection issues, problems with products & services, and advertising & sales issues. Of the complaints, 77% were resolved to the merchants’ satisfaction through the BBB. The high resolution ratio may warrant a higher grade for First Data, but this reviewer does not believe it deserves an “A+.” Therefore, we are assigning an adjusted BBB rating of a “D” for the purposes of this review. You can learn more about why we adjust BBB ratings in our rating criteria.
Since First Data primarily acts as a “behind-the-scenes” card processor for most resellers, a merchant can have completely different experiences depending on which reseller was chosen. Working directly with First Data may not be advisable for small merchants since it doesn’t guarantee lower rates and First Data’s direct merchant support is notoriously poor. That being said, First Data does have the ability to offer lower rates than any of its resellers and may be a good fit for high volume businesses.
Leave your comments about First Data in the comment section below:
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