Victoria firm helps small businesses make sense of murky payment fees

Small businesses may have a new ally in the fight against payment processing fees. Victoria-based MerchAdvisor has launched an online tool to help small and medium-sized businesses to navigate the often complex and confusing world of payment processing, and ultimately save them money.

“We’ve created a marketplace that connects [small business] with payment processing providers,” said MerchAdvisor founder Tony Bjornson. “But it’s not just about saving people money. It will educate business owners on how the industry works.”

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The free online comparison engine allows business owners to plug in basic information about their operation — what forms of payment they accept, sales volumes, typical transaction sizes and the like — and the engine will generate a list of the top payment processors that will suit their needs.

It also breaks down the fee structure and allows business owners to compare charges line for line to see where companies differ in price and service options.

Then business owners can fill in an application to work with the company of their choice based on cost comparison or service agreements.

Those payment processors then pay MerchAdvisor a commission for that business referral.

Bjornson, who said they only deal with reputable processing firms with good reputations — he would not divulge which ones — said it breaks down the confusion inherent in the industry.

“Right now, it’s not transparent,” he said. “And the industry is changing so fast with mobile payments growing. Business owners need to be able to understand the technology and adapt to it and with that they will need resources and information on how it works and how pricing is structured.”

Mike Klassen, director of provincial affairs for B.C. for the Canadian Federation of Independent Business, said processing fees are one of the more pressing issues facing business across the country.

“It’s right up there. It really has become quite a challenge and quite scary if you are a small operator,” he said, noting when small firms try to break cumbersome processing contracts they are often faced with huge penalties.

Klassen said there are two main issues facing merchants: the credit cards themselves, especially fees for premium credit cards which offer rewards to the user and which credit card companies want merchants to pay a premium to accept, and the number of small payment processing firms in the industry who promise the world to merchants only to provide little in the way of service.

“We get thousands of calls from members concerned about these contracts becoming enormously expensive and complex. What happens is they get locked into long-term deals with virtually no service at all,” he said.

The Canadian Federation of Independent Business was one of the groups pushing the federal government to institute a code of conduct in 2010 which was aimed at protecting small business from abusive practices by credit-card companies.

They are also pushing for similar rules to govern contracts for the technology provided by these companies.

Bjornson said the code will help merchants, but it is voluntary and processors do not have to adhere to its terms, though it is being improved and expected to be in force this fall.

Meanwhile, he said his web-based solution breaks down barriers for small-business owners.

“It makes it simple,” he said, noting there are more than 100 payment processing firms in Canada and more than 850 in the U.S. where his company expects to expand in the next six months.

Sam Jones, owner of 2% Jazz Coffee, said simple is good. “I don’t understand the fee structures or where I can cut down on these growing costs; this is a very confusing and complex industry,” he said. “It almost seems like they don’t want us to know, like they are purposely hiding these details.”

Bjornson said people such as Jones also don’t have the time to dig into the details. “We are building this to help them navigate through this space without misguided information,” he said.

Bill Tinney of Sports Rent Victoria expects MerchAdvisor could save a lot of time and hassle. “It would save owners a lot of reviewing time and probably cut down on the phone calls. [It’s] basically the same as a mortgage review comparison site,” he said.

> The free comparison engine is at: MerchAdvisor.com.

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