Everything That’s Wrong with the Conventional Credit Card Processing Industry

As anyone who’s ever run a business can attest, the list of challenges facing business owners is seemingly never-ending. From employee hires to shipping logistics to merchandising, new hurdles arise on a daily basis. And just when you think you can’t possibly tackle any more obstacles, then arises one of the most frustrating of them all: identifying a payment processing contract that is actually in your business’ best interests.

This post is from SwipeSum CEO Michael Seaman, a veteran of the credit card processing industry on a mission to give more power to merchants everywhere.As anyone who’s ever run a business can attest, the list of challenges facing business owners is seemingly never-ending. From employee hires to shipping logistics to merchandising, new hurdles arise on a daily basis. And just when you think you can’t possibly tackle any more obstacles, then arises one of the most frustrating of them all: identifying a payment processing contract that is actually in your business’ best interests. I know firsthand how challenging it can be to navigate the world of payment processing as a business owner. Years ago, I ran a sporting goods startup in San Diego. I remember clearly how frustrating it was to work with merchant services companies who were clearly looking to make a buck (or thousands) at my expense. I got an even more intimate look at the shadiness that happens in the merchant services industry when I took a job at a large payment processing company. My experiences there played a big role in my decision to re-enter the startup world—this time with SwipeSum, a company I hoped would serve as an antidote to antiquated payment processing services. Here are three of the biggest pitfalls present in the conventional payment processing industry—and how SwipeSum hopes to overcome them all.

Problem #1: Complete and utter lack of transparency

When you work in the payment processing industry, part of your training includes the idea that everything is kept behind a black curtain. The reigning ideology seems to be “There’s some shady stuff that’s going to happen, but we’re all going to be okay with that.”Salespeople may price customers excessively high over cost because it increases their commission checks. Some processors refuse to publish their rates or compare themselves to their competitors. Payment processing systems require software and hardware integrations to run smoothly, but you might not hear that from a salesperson. All told, the industry can keep business owners in the dark so they may be unable to understand when and how they’re being price gouged.

How SwipeSum Is Different

It’s simple: We’re committed to full transparency, and we always will be. We don’t hide information from our customers—in fact, one of our goals is to revolutionize the industry so that every company prioritizes transparency over obfuscation.

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We understand that modern business owners want to know the real costs of anything they buy and be able to understand the contracts in front of them without placing endless calls to their sales rep. That’s why every stage of our process is designed to be as clear-cut as possible, and we work hard to eliminate hidden fees beyond the costs we’ve discussed with our customers. (More on this below.)

Problem #2: Hidden/astronomical fees

When businesses sign a payment processing contract, they’re faced with a massive packet filled with dense verbiage and fine print—and it’s pretty tough to understand. People sign up thinking they’ll get an effective rate of, for example, 2%, only to discover the processor can move the pricing at will regardless of what the contract says. So businesses may end up paying way more than they ever expected. When you’re paying 3-5% of your total revenue through credit cards—whether you’re a small business or a large corporation—that’s a huge chunk of money. For example, a company that makes $35,000 a month might be paying close to $2,000 a month in processing fees. That’s a big portion of their total revenue. And in many cases, they never expected to be paying that much. Processing statements are another issue. They’re so convoluted that it can be tough to look at your bill and know what percentage you’re paying or where the money came from. (And I would guess as high as 90% of processing salespeople can’t accurately read a statement in order to give you an honest breakdown.) Unless you’re an industry expert, you may have no idea what these line items mean.

How SwipeSum Is Different

Central to our technology is the negotiation with processors so that monthly fees stay fixed. We never want a client to sign onto a contract expecting one rate, only to discover they’re actually paying another. That’s why we go to bat for our customers and negotiate with payment processing companies on their behalf before we even consider introducing the customer to a given processor.

We hire team members who are industry experts and can help customers understand their statements. And we always present plan options and rates to customers in a way that is easy to read and understand.

Problem #3: Lack of investment in the customer

Many business owners access merchant services through an outside sales rep. These people have very little base salary, so their take-home may be based on commissions—and they’re taught to do whatever it takes to get an account. In other words, they’re not walking into a meeting with the customer’s best interests in mind. And because a lot of business owners don’t have time to research this stuff, it’s easy to get people to sign up for things that aren’t necessarily good for them.

How SwipeSum Is Different

At SwipeSum, we take the opposite approach: We want our clients to know we’re 100% invested in every aspect of their payment processing system, and we want them to get the best deal possible. When a client goes through SwipeSum.com, we conduct a thorough consultation to understand their needs, challenges, and current payment processing systems. Then goes to work for them. Our technology works to understand the full ecosystem of their payment processing system—from software to e-commerce platforms—and curates a network of processing companies to find their best options. Then we come back to the client with all-encompassing quotes and easy-to-read information. All told, our technology provides the lowest rates and holistic solution, for each unique business. And it comes at no cost to the merchant.If a business owner were to attempt our process on their own, it may easily take them a month or more. We provide this personalized information in a matter of days. And we save customers tens of millions of dollars in processing fees every year.Payment processing might not be the sexiest industry out there—and that’s part of the problem. It hasn’t attracted as much entrepreneurial innovation as other industries because (let’s face it) it’s kind of boring. In my opinion, consolidation of the industry (and the ISOs) is on the horizon — and we plan on being at the forefront of it. At SwipeSum, we hope to breathe some much-needed innovation into the industry in order to place greater emphasis on the needs of customers and move toward an age of greater transparency in credit card processing.

Michael Seaman

Michael is the co-founder and CEO of Swipesum. A veteran of the payments industry, Michael and his brother Stephen have led Swipesum since its inception in 2016. In his free time, Michael likes to play with his two daughters and skateboard.

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