Beware of Misleading Sales Tactics Regarding EMV Chip Card Equipment

This article is written mainly for brick & mortar retailers and is specific to the October 1, 2015 fraud liability rule changes and misleading sales tactics surrounding the rule changes.  The new rules are causing a very high percentage of retail merchants to change their card processing equipment to avoid liability for certain fraudulent transactions.  Please read my December 2014 and January 2015 articles if you are not familiar EMV chip cards (credit/debit cards with microchips now being issued) and the fraud liability change on October 1, 2015.

The reason for this article is alert merchants that EMV has brought out some very misleading sales tactics which can negatively impact merchants.

You should Not have to sign a new agreement with your exist processor to upgrade your equipment to process EMV chip cards

If you are being told to sign a new agreement by your existing salesperson/provider to process EMV chip cards than something else is happening other than simply upgrading your equipment and it’s probably not in your best interest.

I recently had merchants contact me because they were told by their existing salespeople that they had to sign a new agreement in order to upgrade their equipment to process the new chip cards.

In one specific case, the merchant didn’t understand why they started receiving two statements each month after upgrading their equipment.  One statement only had minimum monthly fees and the other statement had the full processing detail and costs.

What the merchants didn’t realize is that they had unknowingly changed providers and in the process changed their pricing and their terms & conditions.  They were receiving a statement with minimum fees from the original provider because their salesperson never informed the original provider of the change.

Keep in mind that independent sale agents generally sell for more than one provider. Salespeople often represent more than one provider for several reasons including not putting all their proverbial eggs in one basket plus certain providers offer proprietary products and higher income potential for certain industries.

Unfortunately, some salespeople do try to take advantage of representing more than one provider to make extra income or qualify for bonuses by switching an existing merchant to another provider they represent.  I’m confident that’s what this sales agent did.

Most providers have very strict rules preventing sales agents from switching merchants for personal gain.

In the above situation, the reason the sales agents didn’t inform the original provider is probably because he violated his contract with the original provider.  I know a salesperson that played the provider switching game last year and lost $150,000 in annual residuals when the provider discovered it.  If your salesperson changes your provider without you fully understanding it than I’m sure the original provider would like to know the facts so they can properly deal with the salesperson.

The issue of misleading merchants isn’t limited to small providers or sales agents that represent several companies.  A salesperson from one of the largest banks in the country recently had the merchant sign a new contract supposedly in order to use EMV chip card equipment.  The salesperson actually placed the merchant on some association pricing plan without fully communicating the change.  Once again, the merchant started receiving two statements plus their monthly processing costs went up.  I’m still working through this issue with the merchant and bank, but it feels like the salesperson took some liberties at the merchant’s expense in order to make extra income

Beware of telemarketers and salespeople posing as someone from one of the card companies

I have had a number of merchants tell me that they have received phone calls from Visa telling them that their terminals are illegal and they must upgrade them.  I have never heard of Visa calling a merchant and terminals that cannot process EMV chip card data are not illegal.  Merchants do need to understand the fraud liability shift that takes place on October 1, 2015 and the business decision they must make per my December and January articles.

Never lease equipment from a card processing salesperson

Many salespeople are taking advantage of merchants by leasing terminals and PinPads for absurd amounts when upgrading their equipment.  Unfortunately, many merchants have signed leases at $99 or more per month for up to 4 years.  Per my articles, these terminals and PinPads are $200-$300 devices.  If a salesperson ever suggests leasing the equipment you are speaking to the wrong salesperson, period.

Summary

Please be aware that that there is a degree of unscrupulous activity taking place in the industry right now specific to the EMV chip cards.  Read the December and January articles so you understand the facts and can make a solid business decision specific to EMV chip card equipment.

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