The internet isn’t just for ordering pizzas and playing fantasy football. Entrepreneurs around the world are increasingly turning to this worldwide network of interconnected computers to launch and grow their businesses online.
If you don’t yet have a merchant account, you can’t accept credit cards and therefore cannot make any money. Credit card processing fees are a mystery to many business owners, especially when it seems like there is always someone else willing to give them a better deal.
In fact, the entire industry has been riddled for years with merchant account scams and tricks designed to prey on small business owners’ lack of understanding about how credit card processing works. The following list outlines 4 such scams and how to avoid and how to avoid scammy processors.
Hidden Fee Scams
Businesses need to be careful of hidden fee scams. Many unscrupulous credit card processing companies will try to sneak in hidden fees, surcharges, and penalties, which can end up costing you a lot of money in the long run.
One of the most common hidden fee scams is the ” PCI compliance fee.” It is a bogus charge that credit card processors often levy on businesses to cover the cost of complying with the Payment Card Industry Data Security Standard (PCI DSS).
However, there is no such thing as a PCI compliance fee – the cost of meeting PCI security requirements should be factored into the overall credit card processing charges.
Another hidden fee scam is the “interchange plus” model, which some unscrupulous processors will try to push on you. These transaction fees have nothing to do with actual costs and should be avoided at all costs; it’s simply a way for them to make more money off each sale.
Finally, watch out for hidden surcharges and fees tacked on at the end of each transaction. These are pretty common with international transactions. But if you’re not careful, it can also happen domestically.
Do your research before signing any contracts or handing over money to a credit card processing company – otherwise; it’s very easy to get scammed. Make sure you read the fine print before signing any contract with a credit card processing company. If there are any hidden fees, make sure you get them waived.
If you’re ever unsure about whether a credit card processing company is legitimate or not, do some research online. There are plenty of websites and forums where people share their experiences with credit card processors. You can avoid getting scammed by doing your homework.
Backdoor Merchant Services Scams
Backdoor merchant services scams are a type of scam in which a credit processing company obtains access to a business’s payment processing system, often by posing as a supplier or vendor. The company then uses the business’s payment processing system to authorize fraudulent transactions, which the business then unwittingly pays for.
This scam can result in significant financial losses. So, businesses should carefully vet any suppliers or vendors they do business with and ensure that they have appropriate security measures to protect their payment processing system.
What’s more, business owners should constantly monitor their payment processing system for any unauthorized activity. Also, ensure that the credit card processing company uses enhanced encryption technologies and PCI-compliant security processes.
Identity Theft Scams
Credit card processing companies are a vital part of the economy, but some are fraudulent. These companies can steal identities and personal information, leading to severe consequences for the victim. It’s essential to be aware of these scams and protect yourself from them.
There are a few things that you can do to protect your business from these scams:
- Do your research before selecting a payment processing company. Make sure that they are legitimate and have a good reputation.
- Keep an eye on your account activity. If you see any suspicious charges, report them immediately.
- Use strong passwords and keep your computer security up to date. It will help to protect your personal information from being stolen.
As a business owner, it’s essential to protect yourself and your company by being aware of fraudulent payment processing companies. If you notice any suspicious activity on your account, report it immediately before more damage is done.
Transaction Laundering
Transaction laundering is a process used to disguise the identity of the parties involved in a transaction. It can be done in many ways, including shell and front companies. Transaction laundering is often used to commit fraud or other illegal activities.
Businesses can avoid becoming a victim of transaction laundering by being aware of the signs and symptoms of this type of fraud. They should also have procedures in place to detect and prevent it from happening. Businesses compliant with anti-money laundering regulations are less likely to be targeted by criminals.
Transaction laundering is a serious problem for business owners and can result in significant losses. By being aware of the warning signs and taking steps to prevent them, businesses can protect themselves from this type of fraud.
Conclusion
The best way to avoid falling into these scams is to choose a trusted and reliable credit card processing partner. Before you sign anything, do your due diligence to review and inspect the contract.