Sam’s Club: Not Such a Good Idea for Credit Card Processing

sams club credit card processing

Sam’s Club is a store that specializes in delivering bulk items to customers at relatively low prices. We were interested in looking at their credit card processing program to see if they could deliver deals on credit card transactions as they can for bulk chicken

Our curiosity was spurred by our recent review of Costco which revealed that Sam’s Club primary competitor uses tiered pricing and bait-and-switch tactics.

It turns out that Sam’s club is no different, using the same tactics and hidden fees. It seems that big box stores aren’t cut out to offer reasonable processing rates to small businesses. It makes sense though. After all, Sam’s Club is ultimately a big box store without small businesses’ interests in mind.

Just like we did with Costco, let’s look at Sam’s Clubs online offer:

On their website, the ValueRate Plan is 1.29% + $0.15 per transaction. Sound pretty great but what about the fine print?

Rates are valid for Sam’s Club members only. Rate and authorization fee applies to retail card-present transactions with an average ticket up to $350. American Express transactions priced separately. Some business types are subject to different rates. Rates listed are for qualified transactions only. Rates and eligibility are subject to change without notice. All merchants are required to complete a merchant application and are subject to underwriting and approval. Additional fees may apply. All rates and fees are subject to change in accordance with the terms of the Merchant Agreement. Processing services provided solely by First Data.

As we have seen before, the advertised rate of 1.29% only applies to certain qualified cards. Other cards have higher rates that aren’t listed here. We know this because the fine print says that the “rates listed are for qualified transactions only” and because the advertised rate of 1.29% is below many non-rewards credit cards, which are around 1.5%.

The process of separating cards into different categories of qualification with different rates associated with each category is called tiered pricing. Tiered pricing allows processors to charge more for whichever cards they choose. Furthermore, they can change which cards are in each category at any time.

Listing a very low rate to make a sale only to charge higher rates for the majority of the cards is called bait-and-switch. The merchant is baited with an attractive price and then switched to a higher one once they have committed to a contract. Along with tiered pricing, bait-and-switch is a very common strategy for card processors to ripoff small business owners.

Cancellation Fee

Another issue with Sam’s Club merchant services program is the cancellation fee, which is not advertised on their website and can only be found by talking to a representative.

When I last talked to a representative, I was told that the contract is 36 months and the cancellation fee is $90. This means that Sam’s Club is guaranteed unfair rates for three years or else $90 for cancellation.

Sam’s Club is definitely a place small businesses should avoid for merchant services. They have good prices on bulk almonds but they have no business misleading and overcharging small business owners.

At 99 Merchant Account, we pride ourselves on offering transparent billing, wholesale rates and the peace of mind that you aren’t being overcharged. You won’t find tiered billing, bait-and-switch tactics or unfair cancellation fees. All you need to know about our policies can be found on our website

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