A review of a new Volusion ad for merchant accounts reveals the truth and hidden information about merchant services. I thought my web store CEOgolfshop.com was highjacked when I went to my admin page and all I saw was an ad for merchant services from Volusion. I hit reload. I checked the URL I was at, and yep, it was my web store. But it was my admin page, not my public home page and they interrupted my ‘home’ page with their ad for a Volusion merchant account.

It’s actually a pretty compelling ad. I’ve used Volusion for several years and if I wasn’t in the merchant services business, I’d definitely call or click through. Since I am in the business, I clicked through and here’s what comes next.

Here’s why I don’t like this advertisement and you shouldn’t be enticed this or any similar ad. We all know there isn’t one low rate for everything, right? They capture a bunch of information about your company, and you have no details at all about the deal. Not only that, but it isn’t any where else on their web site. If you read my web site, you’ll find lots of information about interchange rates, the real truth about the merchant account application and underwriting process and lots of other insights so you can make an informed decision before providing company details.

Beyond my personal annoyance, let’s look under the hood at the offer. What? There is no information?
Fortunately, I’ve already been through the details of their merchant account offer before, so I’m familiar with more than what’s posted here. However, if you look harder, there is more information on the web site, they just don’t provide any links to it from the ad or sign up form. As of this writing, they are using Global Payments Direct, Inc. as their merchant services partner provider. Global Payments Direct is a publicly traded independent services provider GPN :NYSE). Current assets are down, intangible assets are up significantly compared to other years and debt is up 50%. But I digress as all of that is irrelevant.

The retail rates quoted have nothing to do with your Volusion merchant store. Retail rates only apply to card present transactions, and the customer must sign a receipt.

Will you save with a volusion merchant account? There’s no way to tell based on the information provided. You will not be getting 2.17% ecommerce as a flat rate. They do explain on their site there is a $.27 per transaction fee, gateway fee, statement fee, etc all pretty standard stuff. But what you don’t know is, what transactions will qualify for the 2.17% ecommerce rate?

Is that for debit cards? With debit interchange for ecommerce at 1.55% plus $.15 per transaction, that’s 63 basis points profit. Now I don’t know if that’s what they are referring to, but if you have a sizable business, please call me and you’ll save real money! I can’t imagine this being a good deal for anyone but small businesses with under $50,000 per year. What is their rate for rewards cards, which represent usually over 40% of cards presented? If you authorize, but don’t capture on the same day, it’s highly unlikely you’ll ever pay that rate, but will probably pay 20-70 basis points more or .20% to .70% more.

See also my article review of Volusion merchant accounts 101.

In conclusion, you can’t tell from their ad, but in all likelihood their solution is as good as any if you have a very small business with under $5000/mth since it will be easy to implement. However, be sure to read the fine print. Is your business expected to grow? What are the penalties for switching to another provider if you are unhappy with rates later ?

Essential questions to ask:

1. Do you have a cancellation fee? New businesses always pay more than established businesses because no one knows how much revenue you’ll really generate. Rule #1 - don’t sign a contract that has a cancellation fee,. You need flexibility to renegotiate or move on as your business grows.
2. What will my cost be for Rewards Cards? More than half of all cards presented by consumers are usually REWARDS cards. (Cards with points or miles that accumulate for the benefit of the card owner). The fee for processing these cards is higher than other cards. Since this is the most common card presented, in order to compare companies, you need to know what your cost will be for Rewards cards. In reality, there are many different rewards cards rates- your processor should at least be able to tell you what your l_owest cost possible is for these cards_. Don’t compare ‘qualified rate’ if that’s what’s offered, compare Rewards Cards rates because that’s what you’ll hit most often.
3. Will my statement show what levels of interchange I hit? If the statement doesn’t break out the cost of the types of cards listed, such as below, look elsewhere to avoid hidden charges.

Here’s something to help you calculate and compare costs: VERY ROUGH
65% rewards cards
20% debit cards
5% corporate cards
10% regular credit card (consumer retail)

Make a spreadsheet- put in columns for cost per transaction, sales per transaction, etc.
So if you projected $100,000/mth in sales, $65,000 would process at rewards rate, $20000 at the debit rate etc.
Now you have a much better comparison of numbers.

Choosing the right vendor. By asking the questions above, you can narrow your list. I realize the terminology is greek to anyone dealing with this for the first time. But that’s OK. You’ll sound super knowledgeable to anyone you talk to (translates into a better deal) and the point is to narrow your list. You may contact me for a quote 954-942-0483, 9-5 ET:)

Short introductory video message for building suppliers looking to improve profit margins.