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Get Your Water at Sams Club, But Dont Get a Merchant Account!

As we continue our eye-opening blog series on the trickery of credit card processing companies, we thought it was time to turn our attention to the other big box retailer who offers merchant accounts these days Sams Club. We wanted to see if they took a similar path as Costco with their sales techniques. Frankly, we hoped that theyd step up and treat small businesses differently.

After Googling Sams Club Merchant Account, we headed on over to samsclubms.com to fill out an online application. Guess what? After 36 hours, they still hadnt called or emailed. Were not quite sure how these companies can treat potential customers this way and still stay in business. We didnt want to wait around any longer, so we jumped onto their handy chat with a consultant feature to get the conversation going.

After asking for the details in the online chat, Josh provided this information and our conversation continues below

[Josh] Visa/MC/Discover Credit & Debit: 1.98% + $0.31 per transaction American Express (optional): 3.50% Batch Settlement Fee: $0.00 per batch Monthly Minimum Processing Requirement: $5 Annual Compliance Fee: $39.95 First Data Global Gateway: $149 setup / $8 per month

[Me] I thought I saw 1.49% + .20 cents on the website? [Josh] You did. However that is when you swipe cards. Processing online is considered more risky per Visa/MC. Therefore, more to process. [Me] Thats weird that the site doesnt say that. [Josh] It should, it probably says retail or something like that. [Josh] Its in the ** at the bottom of the page. [Me] Get exclusive, low rates. 1.49% + 20? per transaction1 [Josh] Rate applies to retail card-present transactions with an average ticket up to $350. Some types of businesses are subject to different rates

Frankly, this is not unusual. With most all the companies that weve researched, they rarely advertise what you really get. They advertise the Qualified Rate, but they fail to mention that over 50% of your transactions wont qualify.

Three Reasons to Avoid Sams Club as Your Credit Card Processor

After multiple emails and providing a SSN, bank name, account number, and routing number, this is what we finally discovered about the merchant accounts that Sams Club offers to small businesses

1. Sams Club has a $149 start-up fee. Strike one. Thats an immediately $149 out of your pocket before you even start processing credit cards. With many merchant account providers waiving any type of setup fee these days, theres really no reason to expect to pay one. Strike one.

2. Sams Club has a 36 month contract with a $90 cancellation fee. Strike two. Theyre locking you in for three years. Although this isnt that unusual, we dont think that its necessary anymore. Small businesses should have the right to change credit card processors if theyre being overcharged.

3. Sams Club advertises one rate and fail to mention their SURCHARGE on rewards cards. While examining their application and agreement, it became apparent that the 1.98% that Josh quoted us was only for qualified transactions. This would include any credit card that was not a business or rewards card. If we processed a business or rewards card (any card that offers the consumer a reward of any type) with an Interchange rate of 2.70% (passed along from Visa/Mastercard), we would be charged the 1.98% plus the difference of the Interchange (2.70% 1.98% = .72%) plus a surcharge of 1.49%. See the calculation below

1.98% Qualified rate quoted by Sams Club + 0.72% Difference between the Interchange rate (2.70%) and the Qualified rate (1.98%) + 1.49% surcharge by Sams Club because youve processed a business or rewards card = 4.19% total rate charged on the Sams Club transaction

Ironically, he forgot to mention this small detail in our initial online chat. In fact, it required multiple emails before Josh was willing to share that all rewards cards get hit with the 1.49% surcharge as well. Thats typically 50% of the all transactions for a small business. STRIKE THREE.

Were hoping that Sams Club will wake up to the reality that small businesses are the bread and butter of our nation and that overcharging them isnt doing anyone a favor. Remember, there is a better option.

AUTHOR RESOURCE BOX: Danny Choi is the Founder CEO of Best Merchant Rates - a merchant account provider that "actually" cares about small businesses. Founded in 2005, Best Merchant Rates exposes the trickery of merchant accounts, educates on the truths of credit card processing, and empowers with transparent pricing.

SUMMARY: Sam's Club is overcharging small businesses by quoting one flat rate and charging them a huge surcharge.

KEYWORDS: credit card processing, merchant account, small business

CATEGORIES: small business, business, financial services, credit card processing, merchant account