SUPPLEMENTAL UPDATE 11/2/2015 – iPayment (AKA: Flagship Merchant Services) has repeatedly made hostile attempts to force the removal of this review. These have included intimidation through bullying and threats of litigation under false pretenses as well as an illegitimate DMCA claim filed with our host, which was rejected on the grounds that it was a “guise” to suppress fair use of a trademark. It is our opinion that such actions reveal the depths to which iPayment’s executives will stoop in an attempt to suppress constitutionally protected free speech that is critical of their business practices. We view these actions as not only highly unethical, but as a demonstration of their unwillingness to correct the problems that cause merchant complaints and, instead, a preference for aggressive strong-arm retribution tactics. If you have been a victim of such threats or bullying, please detail your experience in the comment section below.
iPayment (ipaymentinc.com) is a very large ISO of First Data that claims to provide merchant accounts to approximately 153,000 small businesses nationwide. Founded in 1999, the company is headquartered in Nashville, Tennessee, but maintains its primary operations center in Los Angeles, California. iPayment became a publicly traded company in 2003 but was then purchased by an investment team led by its founder Greg Daily in 2006. It has operated as a private company since 2006.
iPayment also owns the domain name “creditcardprocessing.com,” though it is unclear whether it regards this business as a subsidiary or as a separate enterprise. iPayment is sponsored by Wells Fargo of Walnut Creek, California, as its Acquiring Bank. Carl Grimstad serves as the company’s co-founder and CEO, while Greg Cohen is its president.
- Gas stations
Sales & Marketing
Key Points - Sales & Marketing
|Employs Independent Resellers||Yes|
|Advertises Deceptive Rates||No|
|Discloses All Important Terms||No|
iPayment relies heavily on third-party independent sales organizations (ISOs) and independently contracted agents to bring in new customers. This is a common marketing practice among large processors and often results in merchant complaints because the sales tactics of the ISOs and agents are very hard to control. It appears that iPayment is suffering from the typical complaints of nondisclosure as a result of this strategy, which negatively affects its rating in this section.
iPayment does not appear to directly utilize any deceptive marketing or rate quoting tactics in its official materials; however, some of its ISOs and agents appear to be doing so. There are numerous complaints in the comment section of this review and on other consumer protection websites that describe misleading rate quotes, deceptive sales pitches, and sales agents who disappear after signing merchants up for service. For this reason, merchants are encouraged to research any company offering iPayment merchant accounts before applying.
iPayment Marketing Example
Costs & Contract
Key Points - Costs & Contract
|Early Termination Fee||$250-$350|
|PCI Compliance Fee||Variable|
|Equipment Lease Terms||Variable|
Pricing and contract terms of an iPayment merchant account can vary based on several factors including a merchant’s business type, processing volume, and the agent or ISO setting up the account. Under most circumstances it looks like the standard contract (available below) has a service agreement of 36 months with an early termination fee that ranges from $250 to $350. iPayment also appears to sell long-term, non-cancellable equipment leases through First Data Global Leasing. These factors combined with the overwhelmingly negative merchant feedback we’ve received have earned iPayment a “C” rating in this section. Depending on the ISO or agent, however, the terms of an iPayment merchant account contract are likely to be very negotiable. Be sure to read “Fee Sweep” before engaging any merchant account provider in contract negotiation. See the iPayment Program Guide.
Complaints & Service
Key Points - Complaints & Service
|Total Online Complaints||300+|
|Live Customer Support||Yes|
|Most Common Complaint||Hidden Terms|
As noted at the top of this review, iPayment has also made direct attempts to suppress this review and the legitimate merchant comments posted beneath it. This would seem to indicate that the company prefers to stifle negative feedback rather than address the root causes of complaints. Nevertheless, iPayment has a moderate-to-high number of complaints filed online, many of which can be found in the comment section below. There are two types of complaints that dominate the reports. In the first type, the obvious sources of the merchants’ problems originate with the agents or ISOs that set up the accounts. In these complaints the common theme among merchants are reports of hidden fees, high monthly costs, non-disclosure of the service length agreement/cancellation fees, and expensive PCI Compliance fees. In the second type, iPayment is the source of the complaints and merchants typically report receiving poor service and unprofessional customer support. In one recent iPayment complaint, the merchant states, “I was told by this individual there was No Contract I could cancel at anytime! I was also told that the fee would be aproxamatly $7.00 a month,” only to later learn that “there was a three year contract and I had to pay an early termination fee.”
Since it is our philosophy that the actual credit card processor is ultimately responsible for the agents and ISOs which represent it, we are awarding iPayment a “D” rating in this section based on these complaints.
Key Points - BBB
|Product & Service Complaints||127|
|Billing & Collection Complaints||137|
|Advertising & Sales Complaints||9|
|Guarantee & Warranty Complaints||0|
Note: We have adjusted this company’s BBB rating according to our own standards. To better understand why we adjust BBB ratings, please see our Rating Criteria.
As of this update, the Better Business Bureau is awarding iPayment an “A+” rating, which is surprising given the fact that the BBB report lists 273 complaints in the last 36 months. Only 66 of these were resolved to the customer’s satisfaction. Complainants cite billing and collection issues, product and service issues, and advertising and sales issues as the primary problems. These complaints are most likely the result of iPayment’s use of poorly monitored sales agents and the company’s lackluster customer support. There are also 18 negative informal reviews left on the company’s profile alongside one positive review. We have adjusted the BBB’s rating to a “D” based on iPayment’s complaint volume and resolution ratio.
Related: EMV Terminal Recommendations
About Phillip Parker
Hi, I’m Phillip and I’m disgusted by the state of credit card processing in the U.S. and abroad. I believe that the industry has been overrun by people who engage in fraud and deception in order to steal money from hard working business owners. I’ve made it my mission to expose the companies and individuals who engage in predatory marketing, pricing, and contracts, or just provide terrible service. Along with uncovering the bad guys, I’ve also discovered the good guys who do stand out from the status quo. CPO is a website where you will find ratings and reviews of these companies along with advice on how to save money and which service providers consider. Together we can move the industry in a positive direction. If you would like to help support my work, please checkout “Fee Sweep” my eGuide to getting the lowest possible fees when accepting card payments. If you haven’t heard of “interchange” this advice will save you hundreds, even thousands, in processing fees.Schedule a Consultation with Phillip
Related: Phillip’s Top All-Purpose Merchant Account Picks
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