Watch Out for These Credit Card Processors
The easiest way to save money on credit card processing is to find the best merchant accounts, but there are also plenty of good reasons to keep tabs on the worst merchant account providers. The credit card processing industry is full of scam companies that seemingly pop up out of nowhere. These processors are willing to say or do anything to make a quick buck at the expense of small business owners. Bad processors are notorious for duping desperate sales agents into working on a commission-only basis and then training those agents to deceive merchants into signing long-term, expensive contracts with outdated equipment and poor customer support. To make matters worse, these ripoff companies appear, disappear, and rebrand too often for any one merchant to keep them all straight.
Our Rating Criteria
To help you steer clear of bad deals, we’ve put together the following list of the worst merchant accounts on CPO. These companies have all received “F” or “D” ratings in their CPO reviews due to a combination of some or all of the following factors:
- Deceptive sales tactics
- Undisclosed rates and fees
- Expensive monthly, annual, and early termination fees
- Non-cancellable or long-term contracts and leases
- Numerous public complaints from current and former merchants
- Numerous public complaints from current and former employees
- Reports of poor customer support
- Public interactions with merchants or with CPO that do not reflect favorably on the company
- A poor rating with the Better Business Bureau
- Proven or suspected affiliations with other ill-reputed companies
You can learn more about how we determine our ratings in our CPO Rating Criteria.
Is Your Provider On This List?
The available evidence indicates that you are likely to receive an unsatisfactory outcome with these companies. If you’ve been contacted by a company on this list, we strongly recommend that you conduct some research on the company’s reputation within the industry and consider other options before signing a contract. If you’ve already signed up with one of these providers, we recommend renegotiating your contract as soon as possible. It may end up saving you hundreds or even thousands of dollars in the long run.
Worst Merchant Account Providers
Currently settling a second lawsuit filed by the New York State Attorney General in just the past five years, Northern Leasing Systems (northernleasing.com) is a credit card processing equipment lease provider rather than a full-service merchant account provider. Despite its narrow focus on equipment, the company is responsible for hundreds of merchant complaints due to its standard practice of selling four-year, non-cancellable equipment leases.
Northern Leasing typically allows any sales agent with any merchant account provider to sell its equipment leases as an addendum to their standard merchant account contracts. In fact, many of the companies on this list are known to provide equipment leases through Northern Leasing. This causes some confusion among merchants who don’t realize that they’re signing a contract with two separate entities, and that confusion often turns to rage once merchants learn that Northern Leasing’s leases run for four years (one year longer than the standard multiyear merchant account contract), cannot be cancelled without paying the full sum of the four-year term, and will almost always end up charging merchants an amount that is several times larger than the actual purchase price of the equipment. Details of the NY Attorney General’s settlement can be seen here.
Along with MBF Leasing and Golden Eagle Leasing, Lease Finance Group (signaturebankonline.com/leasing/) is a subsidiary of Northern Leasing Systems that engages in precisely the same style of equipment leasing as its parent company. Lease Finance Group is the second-most active brand used by Northern Leasing and has been cited in far more merchant complaints than its other affiliated subsidiaries.
Lease Finance Group is also named in the New York Attorney General’s lawsuit against Northern Leasing and is known to offer the same long-term, non-cancellable, exorbitantly priced equipment leases as Northern Leasing. It has an “F” rating on CPO and an “F” rating with the BBB.
Main Street Processing is a DBA of Datalink Bankcard Services that also sells under the name “Tier 1 Processing.” We first discovered this processor as a result of a large influx of complaints that all described the same unethical slamming tactics. These complaints have come and gone since our initial publication of Main Street Processing’s review, but they all consistently describe telemarketers who pose as the merchant’s current processor.
There is also recent evidence to suggest that Main Street Processing has started doing business as “Wholesale Banc” and “Challas Group.” These companies share personnel with Datalink Bankcard Services and have started to accumulate similar complaints, so they may find themselves on this list sooner rather than later.
Ladco Global Leasing Solutions is an equipment leasing company that appears to be the preferred equipment leasing partner of Elavon, one of the largest direct credit card processors in the world. Ladco Leasing’s standard equipment lease terms are nearly identical to those offered by Northern Leasing Systems and its subsidiaries: multiyear, non-cancellable, inconsistently disclosed by agents, and far more expensive than the actual purchase price of the equipment.
Ladco’s unclear status as a potential subsidiary or affiliate of Elavon makes it difficult to determine how much of the company’s marketing and customer service is managed by Elavon. Nevertheless, we have located over 200 merchant complaints that express frustration with the company’s ironclad lease terms and excessive cost.
First Data Global Leasing is the credit card processing equipment leasing branch of First Data, one of the world’s largest direct credit card processors. Like Ladco Leasing and Elavon, First Data Global Leasing is responsible for the vast majority of non-cancellable equipment leases sold to First Data merchants. There are hundreds of merchant complaints that describe insufficient disclosure of lease terms and outrageously high monthly lease fees through First Data Global Leasing.
First Data Global Leasing provides leased equipment both for merchants contracted directly with First Data and for merchants who have signed up with First Data resellers. First Data’s overall brand has a slightly better reputation among merchants than Northern Leasing, but First Data Global Leasing’s contract terms and customer service rate just as poorly as the worst leasing providers on CPO.
First American Payment Systems
First American Payment Systems is a Texas-based super ISO of Vantiv that has served as the parent company of some of the lowest-rated ISOs on CPO, including Eliot Management Group, Trans Tech Merchant Group, Summit Merchant Solutions, Apex Merchant Group, Trinity Merchant Group, and Certified Payment Processing. First American Payment Systems and its many resellers are known for their large teams of independent sales agents and multi-year contracts with termination fees of up to $495.
Although these brands have seen lower complaint rates in recent years (which could indicate a slowdown in business), they were at one time the most reliable sources of negative merchant feedback on our website.
North American Bancard is a large, 25-year-old Global Payments reseller based in Troy, Michigan. The company employs a large team of independently contracted sales agents and provides a standard contract of three years with a liquidated damages-style early termination fee.
North American Bancard is the parent company of the mobile point-of-sale solution PayAnywhere, which has steadily received public complaints since its launch in 2010. In May 2017, North American Bancard bought Total Merchant Services.
Leaders Merchant Services is a California-based merchant account provider that operates as a fully owned subsidiary of iPayment. Our review of Leaders has been receiving merchant complaints about its tiered pricing quotes and hidden fees since 2012. Despite this, present-day complainants suggest that the company continues to use more or less the exact same sales approach that it always has.
Its contract terms aren’t much more appealing, given that it offers a standard contract of three years with an early termination fee between $250 and $350. Leaders has received a “D” rating according to our rating criteria for years.
Merchant Lynx is a reseller of iPayment that is headquartered in Annapolis, Maryland. The company has received complaints that are typical of an iPayment entity, such as nondisclosure of fees, aggressive sales tactics, and expensive contract terms. The company’s contract is a three-year agreement with a termination fee of $495, and it may also come with a long-term equipment lease.
Merchant Lynx has also received a few complaints from merchants who claim that they were unable to reach a single representative of the company for months at a time. This poor customer service track record is a large part of why the company is on this list.
Appstar Financial is a merchant account provider headquartered in San Diego, California. Its review on CPO has accumulated complaints at a steady pace since its publication in 2011, and most of these complaints cite hidden fees, constant telemarketing calls, and poor support for the company’s sales employees.
Despite the regular negative feedback posted by merchants, Appstar Financial does not appear to have made any significant alterations to its practices in the years that we have been covering it. The company has accordingly maintained its “D” rating for the past few years.
Eliot Management Group is one of the more active resellers of First American Payment Systems, and its reputation mirrors that of its parent company. Merchant complaints describe an employee “hiring mill” that burns through poorly trained sales reps who are motivated to sign merchants up for very expensive contract terms. These terms reportedly include a three-year contract with a $495 termination fee and a possible equipment lease.
Eliot Management Group is not necessarily a worse option than other First American Payment Systems resellers, but it has maintained a consistent complaint rate on CPO for long enough that it is a good representative of that cluster of companies.
Electronic Merchant Systems
Electronic Merchant Systems is an Ohio-based merchant account provider that appears to be a subsidiary of the Francis David Corporation. The company has received a moderate amount of complaints from merchants and employees about undisclosed fees and contract terms. It offers a relatively short standard contract of 18 months, but its termination fee is $595 and long-term equipment leases are occasionally involved.
Electronic Merchant Systems was the subject of a 2015 complaint from the Consumer Financial Protection Bureau related to the company’s facilitation of a “phantom debt” scheme. A federal judge ultimately dismissed this case in 2017 due to noncompliance by the CFPB.
Electronic Payment Systems
Electronic Payment Systems is an Englewood, Colorado-based merchant account provider that is almost 25 years old. The company initially received a poor review on CPO after a sales representative outright lied to us when we called them posing as a merchant. Since then, it has maintained a steady rate of complaints and never truly crawled out of the hole it dug with that initial interaction. EPS offers a one-year contract that would be somewhat competitive for the industry if it did not have an attached liquidated damages termination fee.
In 2017, the FTC filed a complaint against Electronic Payment Systems and several of its sub-ISOs alleging that the company’s employees knowingly laundered payments for a fraud scheme called “Money Now Funding.” The outcome of this complaint is still pending.
Have you had a bad experience with one of these processors? Do you know of any providers that deserve to be on this list? Let us know in the comment section below!