Payex

If you read  Part I of this series you will remember we were discussing the things you need to consider when choosing a bank as the provider of your merchant account.  In Part II we will discuss the mistakes some business owners make when rushing into the decision to “just use their bank” and how you can avoid them.

I left off by recommending you choose a bank that has partnered with a third party merchant services specialist. I then provided a list of questions you should ask the bank before deciding if they are the right fit for your business. Those questions again are:

•    How long has the bank been referring clients to this company?
•    Have they received any complaints?
•    How many companies did they research before choosing one?
•    What was their reason for selecting the one they did?
•    Do they (the bank) receive compensation for referring you?
•    If so, is it in the capacity of a onetime referral bonus or long-term residuals?

There are two potential issues here that these questions will clear up for you.

1. Does the bank know who they’re dealing with? I have seen it time after time—whether it’s a bank, an association or some other referral type relationship, where they have no idea what makes one company better than another—much less do they understand what the company they recommend truly stands for. That is often because they don’t shop around. They may not even know the right questions to ask. They instead base their decisions on how much they’re compensated or where the partner is located or even worse—how big of a company they are.

2. Are you going to pay higher prices because of the referral relationship? There is nothing wrong with the bank making money for the referral, short or long-term… just as long as the fees you pay are still competitive with the market.

The biggest mistake many people make when they think—“I’ll just use my bank”—is they go in blind because… “It’s the bank.” The fact is, finding a relationship through your bank is often the most expensive road to travel. You pay for the creditability the bank lends—and that does NOT mean you will necessarily get what you pay for.

Something else to consider when working with a bank is their knowledge and expertise in the wide array of processing equipment and software available to you. In other words, are you going to end up with a piece of equipment because—that’s what the bank knows—or because it’s the best solution for you?

Regardless of how the relationship works, considering the level of knowledge about the processing industry the person you are working with has. Banks wear many hats and it is hard to find a bank that truly has a “specialized” team if experts in merchant services that have been properly trained and/or has a decade or more of experience to build from. This is the primary reason I’m in favor of banks that use referral partners as their preferred means of offering merchant accounts.