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How to Negotiate with a Merchant Service Provider

Updated: Oct 22, 2021

Credit cards have been a huge game-changer when it comes to establishing customer loyalty and earning higher revenues.

It's almost a given that everyone owns a credit card – even several cards at a time. Credit cards have been a blessing for many merchants because not everyone has sufficient funds for purchases all the time.

This is where merchant account providers (MSPs) play a significant role as they are the ones who provide these establishments and businesses with the ability to process payments for their products and services via debit and credit cards.

Understanding How MSPs Make Money

Owning a credit card has undeniable perks, but you would agree that all the activation fees, service charges, and transaction fees can become too much.

This is primarily how MSPs earn from offering their businesses. Understand that merchant accounts are being used to accept the customers' payments and process all credit card dealings. And every single process has a corresponding charge.

Do the math—consider how many times a day you use your credit card, consider your family members’ usage, and factor in how many people across the entire country mirror the action. Now imagine all the combined transaction fees, late payment fees, and other hidden charges.

Negotiating with Merchant Service Providers

When looking for an MSP for you and your business, don’t simply agree to the first offer they put on the table. You need to understand what’s at stake and negotiate, so it also becomes a win for you.

With this in mind, here are non-negotiable actions expected from you before you finally settle on your partner MSP.

1. Create your Top 5 List

After identifying your credit card processing needs, create a list of MSPs that can meet your requirements. It would help if you narrowed your choices as much as possible.

Remember that MSPs don’t follow a standard system. Some can be your ultimate one-stop-shop, while others partner with additional companies to provide extra services and equipment.

Part of your intensive data gathering is to determine whether they can directly provide comprehensive services and tools or if third-party services would be involved.

If the MSP liaises with vendors, ensure you include associated costs. Additionally, you have to identify if your listed MSPs are direct suppliers or resellers.

2. Interchange-Plus Pricing is Non-Negotiable

Interchange plus pricing is one of the best rate structures, and it gives you leverage and power as a client.

Mention this pricing structure to your Top 5 MSPs to establish that you are well-versed in merchant account rates. This would remove the misleading rate quoting schemes that are often used with new clients.

If any of your listed MSPs reject the idea of interchange plus, then move on to the next MSP. Why? Because other pricing models such as tiered only look good on paper. In reality, most transactions won’t qualify, thereby invoking higher processing rates.

3. Allow the MSPs to Win You Over

The competition between different merchant service providers is surprisingly fierce. So engage with your Top 5 and let them compete to win your business.

Although this might mean relentless and unforgiving phone calls and plenty of sales talk, you’ll get first-hand experience of how persistent and dedicated your future MSP can be.

By the end of this competition, you will be the winner because who knows what add-ons or additional bonuses are thrown into the deal to get your business. These are potential savings for your organization, and in a business, every dollar counts.

4. Sign a Contract

Once you have settled on one of the MSPs who can partner and collaborate with you, then you're left with closing your deal through a service agreement or contract.

You must read, understand, and accept the entire document that your MSP sends you. All rates, fees, and service length, among others, should be stipulated without any loopholes or discrepancies.

If in doubt, don’t sign. Discuss these details with your MSP and only when you are content, sign the document and make copies of the contract for yourself before sending the original back to the MSP.

Once everything is signed, you are likely to go through a credit investigation. You need to submit the necessary documentation to get approval to commence. Be prepared to further work with your MSP should they obligate you to create a cash reserve, daily discount, or personal guarantee on your account.


Choosing and negotiating with an able merchant service provider is one of the essential elements to the functionality of your business. Take your time in selecting one.

At this point, you have to put your internet stalking skills to use, be very attentive to details, and get the best rates from a reliable provider.

Get information on how you can set up a Merchant Services account with Loyent if you are a small business owner. Our professional team is here to assist you with any questions you have about merchant services for your business.

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