Lack of Public Disclosure on Rates and Fees
One of the major challenges for business owners considering First American Payment Systems is the lack of publicly available information on their rates and fees. Since the company does not disclose pricing on its website or in most of its marketing materials, the costs for their services are highly negotiable. This means that business owners are often left to navigate a confusing pricing structure without clear benchmarks to compare against. The complexity of credit card processing options—such as various rate structures, transaction fees, and additional charges—puts business owners at a distinct disadvantage during the negotiation process.
Counter-Productive Commissioned Sales Incentives
Furthermore, First American likely incentivizes its sales agents and resellers to set up more expensive accounts by offering higher commissions for pricier contracts. This can lead to business owners being steered toward less favorable terms, including higher rates and unnecessary fees.
Non-Transparent Pricing
It is also probable that First American promotes pricing models that are less transparent, such as tiered pricing, over the more straightforward and competitive Interchange-Plus pricing. Tiered pricing typically involves categorizing transactions into different levels (or “tiers”), with each tier being charged at a different rate. While this structure can appear simpler, it often results in higher overall costs for the merchant, as it is less transparent and harder to verify compared to Interchange-Plus pricing, which clearly separates processor fees from interchange fees.
Knowledgeable and Effective Negotiation Required
This lack of transparency and complexity in the pricing model makes it difficult for business owners to accurately assess the total cost of their payment processing. Many merchants who lack deep industry knowledge or experience may find themselves overpaying for services due to the absence of clear, upfront pricing. As a result, it’s crucial for businesses to carefully negotiate their contracts and, when possible, opt for pricing models like Interchange-Plus that offer greater visibility and control over their processing expenses.
Three-Year Service Agreement
The terms for a First American Payment Systems merchant account can vary based on the agent, sub-ISO, or the business itself. Generally, the terms include a three-year service agreement with an early termination fee that ranges from $300 to $495. Additionally, merchants are subject to a $120 annual PCI Compliance fee, along with other monthly and processing charges. These fees are often not fully disclosed during the sales process, leading to unexpected costs for business owners.
Automatic Contract Renewal
A key issue with First American’s contracts is the automatic renewal clause. If the merchant does not cancel the agreement within a specific window prior to the contract’s expiration, it automatically renews for another one-year term. This can be especially frustrating for businesses that attempt to cancel their services, only to find themselves locked into another year of fees. Merchants considering First American should pay close attention to these contract details and ensure they are fully aware of the cancellation process to avoid unnecessary renewal fees.
Virtual Terminal and Payment Gateway Pricing
In addition to in-store payment processing, First American offers its virtual terminal and payment gateway services through FirstPay.Net. However, pricing for these services is not transparently provided on their website or marketing materials. Merchants can expect additional costs for these e-commerce services, including gateway fees, technical support fees, and batch fees for processing daily transaction batches. Additional transaction fees and varying processing rates may also apply, depending on the service package.
Because pricing can be inconsistent and not well-publicized, we strongly recommend that businesses compare their options and explore alternatives by reviewing our list of the top merchant services providers. Choosing a more transparent and competitive provider could save businesses from unexpected fees and better align with their e-commerce needs.
Long-Term Equipment Leases
Another frequent complaint centers around the long-term, non-cancellable equipment leases that First American arranges through its affiliate, Merimac Capital. These leases often last up to 48 months, locking businesses into extended commitments for equipment that may be outdated or not worth the cost. Many merchants have reported that they were not fully informed about the non-cancellable nature of the leases, leading to substantial financial burdens when they no longer need the equipment or wish to switch providers.
Compared to other providers, First American’s contract terms, particularly regarding equipment leasing and service agreements, fall short of the industry’s best practices. There are more cost-effective and transparent options available for businesses seeking flexible, low-commitment contracts. For those exploring alternatives, reviewing merchant account providers who offer clear terms, transparent pricing, and no long-term commitments could be a wise choice.
