If you’re not taking plastic at your business, you’re the exception. It is the cost of doing business, and unfortunately, many groups make it more of a hassle than it needs to be.

Couple running bookshop

I am just going to blurt it out: Contract fees are completely bogus. When I say contract fees, what I want you to hear is ‘snake oil’. I do not care what the salesperson says to you, there is no legitimate fee for signing up for a merchant account so that your business can take credit cards. I have seen this disguised under a hundred different names like account activation fee, debit network setup fee, contract processing fee: all bogus.

Imagine this. You are buying a car. The car is $20,000 and the salesperson (who is going to make a commission from selling you the car) looks at you and says, “Now I need you to pay me $150 for the honor of being able to buy the car from me”. You’d laugh at them hysterically.

When signing up an account so your business can accept plastic as payment, this happens every day. The reason many seniors that are entrepreneurs can fall for this is they remember the difficult history of the credit card. They remember when using a check was easier than using a credit card (and I am about to blow some younger minds here), because there was no internet. The cards used to be swiped on ‘knuckle busters’ with carbon copy and half the data was manually filled out. I know this will make some 20-somethings hyperventilate, but it’s true. The system did not have an infrastructure and credit card companies were effectively charging businesses a start-up fee on the account to help build one.

Those days are gone, but some salespeople still try and often succeed to add these charges. I have seen contract fees up to and including $900. This was not for equipment. It was just to sign up and no reputable company should ever, EVER do it. It is only there to line the company’s and the salesman’s pockets. If you see a contract with any kind of fees for signing up these days it’s so they can do what’s joked as: the gym membership hard sell. That’s when they tell you that normally there is a fee to sign up, but if you sign today they’ll waive the fee. Cue hysterical laughter. I have used this metaphor before, and I will again. If you sign up cell phone plan, they will give you a phone. This is because their money is made on the plan. It’s true here as well. The salesperson is not doing you a favor by letting you have a merchant account; you are doing them one, because that is how their money is made. Don’t take this as a rant on sales. I am in sales, and I have always liked my work. There are simply some bad apples in the bunch and contract fees and any other kind of fee at signing up are just not legitimate fees.