Review of First Data Merchant Services

Overview

Detailed Review

Below is a detailed review of First Data Merchant Services offering. The review is broken down into the following categories.

• Features
• Pricing
• Contract Fine Print
• Equipment
• Countries Served
• Contract Length / Termination
• About the Company
• Customer Service
• Common Customer Complaints / Our Verdict
• Who Should / Shouldn't Use this Processor

Features

Depending upon the type of business you own, some of the following features may or may not be important to you.

First Data has it all, and well it should considering the size of the company. Remember that resellers also sell First Data equipment, so none of the options below should change. Be sure to read all contracts carefully, however.

Software Compatibility:
Intuit Quickbooks	Yes
Sage 50	No
Microsoft Dynamics GP	No

Hardware Compatibility:
Windows / Blackberry	Yes - Blackberry
iPhone / iPad	Yes
Android	Yes
Alternative Transaction Types:
Phone Orders	Yes
Internet Orders	Yes
Wireless Orders	Yes
Mobile Orders	Yes
Snail Mail Orders	Yes
American Express (AMEX)	Yes
Add Tips to Bills	Yes
eCommerce / Shopping Cart	Yes
International Sales	Yes
Recurring Payments	Yes
EMV Chip Cards	Yes
Contactless Cards	Yes
Loyalty / Gift Cards	Yes
eChecks / Electronic Checks	Yes
Welfare Benefits (EBT/SNAP/TANF)	Yes
Security / Fraud Prevention:
AVS Fraud Protection	Yes
PCI DSS Secure Transactions	Yes
Industry Specific:
HIPAA Compliance (Healthcare)	Yes
Trust Account Debiting (Legal)	No
Fleet Cards (Petroleum)	No
Online Menu Orders (Restaurants)	Yes
Countries Served:
U.S.	Yes
Other Countries	Yes
International	Yes

We have to say "yes" to almost everything, because First Data does have it all plus some. In fact, from some of the complaints we read, First Data may be too rich in products to properly maintain them as far as upgrades and the follow-up service for those improvements.

The security features seem outstanding, especially for check fraud. Merchants can scan and deposit checks at the register, and also run the checks against a national registry of bad check writers. They also offer end-to-end encryption for optimal data security.

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Pricing

Almost Every merchant account services company uses either Interchange Plus or Tiered Pricing (read more about this topic here). Where companies allow us to disclose pricing information, we show the deals that our secret shoppers were able to achieve. When companies offer both Interchange Plus and Tiered Pricing, we try to get a quote on both options.

Our Experience

First Data doesn't provide a single bit of financial information on their site. In fact, we had a difficult time even finding their fine print. We couldn't find it linked on their site, so we conducted a search and found the information in a PDF file. As far as contracts and terms are concerned, First Data gets around that lack of online transparency by stating that each contract is built to serve the merchant. This statement isn't rare for a large credit card processing company, especially when they have the flexibility to offer that route. We do know that they may offer a variety of billing options, including tiered, interchange-plus, flat rate or enhanced billback.

With that statement, however, comes a caveat: If you sign up with First Data, be sure to get everything in writing, and don't agree to sign unless they agree with your terms.

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Contract Fine Print

First Data's fine print is all within a 48-page PDF file that does, indeed, have some very fine print. Here's what we discovered:

Fine Print Fees:
Termination Fee	Yes, Variable
Setup / Application Fee	Yes, on most products and services
PCI Compliance Fee	Yes
PCI Inaction Fee	Yes
Gateway Fee	Yes
1099-K Fee	Yes
Statement Fee	No
Online Reporting Fee	None
Monthly Minimum Volume Fee	Yes
Accept International Pymt Fee	Per Transaction
Voice Authorization Fee	Possible
Monthly Min. Process Fee	Possible
Daily Batch Fee	Possible
ACH / Direct Deposit Fee	Possible
ACH Charge Fee	Possible
ACH Return Fee	Possible
FANF Fee	Yes
Chargeback Fees	Standard

Freebies:
Initial Consultation
No Application Fees
Free Customer Service

Our Take

Here's a little hint to small business owners: Even if you play by all the rules and never have a chargeback or return for the length of your contract, you may still need to pay a fee to end that contract on the termination date. That's a "gotcha" if I've ever seen one. Here are more fees:

• A substantial portion of the Discount Rate or Transaction fee you pay go toward VIA, MasterCard, Discover, or AmEx exchange sales and chargebacks.
• If First Data doesn't receive receipt of your PCI compliance within the first 120 days of your contract with First Data, you will be charged a monthly non-receipt fee until you become compliant.
• Chargeback fees range from $25 to $150 per transaction. If you obtain an Authorization Approval Code during the sale, you might avoid those fees. You also are subject to card organization chargeback fees. VISA and MasterCard currently charge a $250 filing fee and a $250 review fee to dispute chargebacks.
• First Data likes daily submissions of sales. If you're late, you may pay fines and experience higher interchange rates.
• The merchant is responsible for all shipping and handling interchange fees.
• If your sales volume changes, First Data also changes...they can alter your rates and fees at any time without notice, especially if you see increased sales.
• Merchants must pay a Batch Closure Fee. This fee is different than the Batch Settlement Fee. Those fees are based upon two different types of card transactions, which mean the merchant may pay two separate fees upon submitting a daily batch. See page 17, Article 18.7.
• If the merchant doesn't pay all fees within thirty days, interest is added to the remaining bill.

That list is just a portion of what we discovered in the Merchant Services Terms and Conditions. The word, "fee" is included in that document 328 times, although a majority of those uses concerned chargebacks. From what we understand, First Data is ready to shut you down for any reason, but chargeback frequency seems to be the main reason and we can see why. Unless you run a large corporate business, there's no way to pay those fees on a frequent basis. Add interest to remaining items on your bill and you could be paying First Data for life.

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Equipment

While your transactions usually take place electronically, the actual device that you use to swipe a customer's card is referred to as "the equipment." This equipment includes hardware and, often, software or apps for that hardware to function properly.

First Data not only supplies their own customers with hardware and software - they supply their resellers with the same equipment. This is an important issue to remember when you deal with a reseller, because you'll be signing two contracts - one with the reseller and one with First Data (especially with leases). We can't even imagine the difficulty a merchant might encounter if they have trouble with this software as a reseller client, as we heard some horror stories about dealing with First Data directly:

Hardware

• Clover Station: This is a control system design, supposedly, for small business that tracks inventory, manages employees, and provides analytics about customers via transaction records. It includes cloud-based software connecting a terminal and screen to the merchant's information. The setup is similar to Square, but it comes with its own screen (no iPad required).
• First State FD400: This is a wireless and portable terminal design for POS on the road. This setup does require a mobile phone or tablet.
• FD35: This is a peripheral that accepts EMV transactions via a terminal.
• Other Solutions: First Data offers a wide variety of terminals for sale or lease that accept basically every credit or debit card under the sun, along with gift cards and checks. Some solutions provide a turnkey ATM Program that provides the merchant with the ability to offer Automated Teller services. First Data also sells scanners, touch screens, POS displays and more.

Software

• POS Software: This software is general and keyed into whichever terminal you chose upon sign-up with First Data.
• First Data Retail Solution: This software replaces the cash register and payment terminal with a single system to manage an entire business.
• First Data Global Gateway Virtual Terminal: This software turns any Internet-connected PC into a POS device without installing that software.
• ICVERIFY: This software is a PC-based alternative to traditional POS software required to accept credit, debit, and purchasing cards.
• Perka: This mobile program helps merchants with online sales via the customer's mobile device (online store).
• Datawire Secure Transport: Even more software...this solution leverages existing Internet connections to increase security and to reduce transaction times.
• Apps: First Data offers a growing number of apps that seem to replace the patches or upgrades that many machines require. Other apps provide merchant solutions such as apps for inventory, etc.

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Countries Served

First Data Merchant Services can handle payments from and for merchants in the United States, Canada and abroad.

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Contract Length / Termination

I generally don't like long-term contracts or termination fees in merchant services agreements, because the ability to cancel keeps the credit card processor on its best behavior, including the willingness to make you happy if there's a dispute. Plus, this ability to cancel gives you the ability to move on if you find a better deal.

First Data isn't clear on the length of their contracts, so we gave them a call about that (see below under customer service). We do know this: Early termination fee equals a number of credit card organization fees times the number of months left in your contract. See page 19, Article 23.5 in their contract for Merchant Services Terms.

With all that said, when we called the sales office at First Data, I learned something valuable to know for any merchant - you can, possibly, write your own terms. See below...

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About the Company

The merchant account services industry is multi-layered. Understanding how those layers fit together can be confusing (Read More in this Article). A good thing to know, however, is whether or not your company is a direct processor (good if yes) or, if not, then to know who they process with and whether or not that processor is reliable. The second thing to know is whether or not the service or sales staffs are in-house or outsourced. In-house staffs are preferable for you, as these staff members may have more access to sources that can resolve your issues.

Processor:

First Data cuts out the middleman with its combined services as a merchant acquirer (aka an "ISO") and payment processor. This is a plus for merchants who want to use this service, because that lack of a middle man means savings to you, the business owner. You won't have to worry about the confusion that a middle man can cause when it comes to contracts or service. However, First Data is very fond of acquiring resellers, too, and those resellers may not be upfront about their deal with First Data. Be sure to do your homework.

Account Sales:

According to First Data, their sales team is in house, but they also rely heavily on their resellers. These resellers include seemingly reputable services such as Wells Fargo merchant services. While Wells Fargo was upfront with us about using First Data as their merchant service processor, we understand that many other ISOs are not transparent and use misleading sales tactics and deceptive marketing practices. We also understand that First Data's sales force often isn't forthcoming with all the fees included in the contract, especially lease terms and termination fees. Again, we're suggesting that you get everything in writing before you sign up.

Account Service:

First Data offers customer service via phone, email, and support center for their customers. This support is offered 24/7, which makes sense for serving global business and their varying hours.

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Customer Service

Common Customer Complaints / Our Verdicts

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Who Should / Shouldn't Use this Processor

Who It's Good For

• Low Chargeback Businesses: You don't want chargebacks for any reason, but this is the number one reason why First Data may terminate or suspend your service. Keep those sales clean and be sure to collect all the information you might need to dispute a chargeback or even a return.
• Large Businesses: If you have a CFO, an attorney, and a staff that can help you keep an eye on First Data, then go for it and enjoy all the bells and whistles that First Data offers. Otherwise the lack of transparency and tons of fine print are worrying.
• Internationally Focused Merchants: We might qualify this label by stating "large internationally focused merchants." Small businesses might do business overseas, but they still might not be able to afford First Data's fees.

Who It's Not Good For

• Small Businesses: If you, as a small merchant, decide to use First Data (and you should use them instead of a reseller), we will warn you that you should get an attorney to look over First Data's terms and come up with a set of your own terms. If First Data accepts them, then by all means move forward. Still, we'd advise you to watch this company like a hawk and keep your own nose clean re: chargebacks and returns. Or, you could go with a small-business-friendly processor.
• High Chargeback Business: If you're in the business of creating chargebacks, you can look at some high-risk processors who might be more amenable to your business. This company might suspend you if you even think about the word.
• Fee Conscious Businesses: First Data might get you coming and going. If you can't deal with finding all the various fees that First Data charges and deal with them upfront, then find another processor for your business.

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