Is Merchant Services, Inc. a Safe Choice for Your Payment Processing?

Merchant Services, Inc. Pricing

Based on client complaints, the typical Merchant Services, Inc. contract features a three-year term with several fees: a $495 early termination fee, a $134 “data protection” fee, a monthly minimum fee up to $75, a $19.95 monthly PCI non-compliance fee, and a $7.50 monthly statement fee. Recent reviews have highlighted discrepancies between the quoted per-transaction rates and those charged after contract signing. Additionally, a $48 “Clover Business Management” fee was reportedly introduced without prior notification last year.

Virtual Terminal and Payment Gateway Pricing

Merchant Services, Inc. also offers virtual terminal and payment gateway solutions as part of its e-commerce service portfolio. Despite this, specific pricing details for these services remain undisclosed. Commonly, additional fees include gateway charges, technical support costs, batch fees, and other transaction-related expenses typically associated with e-commerce services.

Avoid Equipment Leases

A class-action lawsuit against Merchant Services highlighted issues with equipment leases, primarily through Northern Leasing Systems and its subsidiaries. It appears that Merchant Services continues to offer such leases, which typically lock businesses into a 48-month, non-cancellable agreement costing significantly more than the outright purchase of the equipment. Purchasing equipment outright is strongly recommended. Business owners are also encouraged to consider our list of the best merchant services for more competitive options.

Not Competitively Priced

The available data on Merchant Services, Inc.’s contract terms and pricing strategies contributes to a “D” rating for the company. Their rates are considerably higher than those of more affordable merchant account providers. Anyone with direct experience or documentation related to Merchant Services, Inc.’s rates or contracts is encouraged to share this information in the comments section below.

Merchant Services, Inc. Lawsuits and Fines

Merchant Services was the subject of a class-action lawsuit filed in 2010 that contained the following allegations:

Plaintiffs allege that Settling Defendants misrepresented and omitted the costs, term, early termination penalties, and other provisions of the processing agreements and leases and unlawfully collected commissions, cancellation fees and other amounts via automatic withdrawals from merchant bank accounts. Plaintiffs also allege that Settling Defendants forged signatures and modified contracts and authorization forms for electronic debits after those contracts and forms had been signed. Plaintiffs additionally contend that Settling Defendants’ sales practices violated rules of MasterCard. Plaintiffs further assert that if customers defaulted on payment, Settling Defendants engaged in improper collection efforts by making unlawful credit inquiries on the personal credit reports of the personal guarantors who signed the agreements.

The claims against Merchant Services, Inc. were settled in 2013 with each member of the settling class receiving up to $350. Merchant Services, Inc. remains an active business, but the company agreed per the terms of the settlement to make the following changes:

By December 20, 2013, the Settling Defendants have agreed to make a variety of changes to their marketing materials to ensure future customers have additional disclosures. They agreed to register any fictitious business names that they intend to use, such as “Merchant Services.” In addition, if they continue to use cost comparison forms, such as the rate estimation comparison sheet, they agreed that document shall contain preprinted information listing or designated areas in which the following information shall be written: the name of the registered independent sales organization involved in the transaction; the entity through which bankcard processing services would be provided; the entity through which leasing services (if any) would be provided; the fact that processing rates are estimated and that higher rates may apply depending on the type of card, including mileage and rewards cards; the fact that equipment leasing is optional; and the fact that a cancellation fee will apply for early termination. Finally, the Settling Defendants agreed to have sales representatives leave with the prospective customer a copy of the above document and a current business card containing his or her current business address, phone number, and email address.