Sam’s Club Merchant Account Services – Buyer Beware!

Sams Club Merchant Services

Sam's Club isn't the best choice for businesses that want competitive credit card processing services.

Not too long ago, CardFellow posted an evaluation of Costco merchant accounts that found Costco's service to be very disappointing. Undeterred, I decided to take a look at the merchant services offered by Sam's Club to see if Costco's big-box competitor fares any better. As it turns out, Sam's Club uses the same bait-and-switch tactics and opaque pricing as its rival Costco.

Sam's Club has partnered with First Data to offer credit card processing services. There is nothing wrong with that, especially since First Data is the largest processor in the United States, and many companies resell First Data's services. As I've outlined below, the problem is with virtually every other aspect of Sam's Club merchant services.


Tiered Pricing

The first downfall of Sam's Club small business credit card processing service is that it uses tiered pricing. Below is a screen shot taken from the Sam's Club Web site, where the company claims to offer "an exclusive low rate" to its members.

1.49% Rate

There are three problems with this offer: the rate isn't exclusive, the rate isn't fully-disclosed, and the rate is too good to be true.

Exclusive Rate?
Tiered pricing allows processors to circumvent interchange fees to offer whatever rates they choose. For example Costco, the closest competitor of Sam's Club, is offering its members a slightly lower rate of 1.48%, but both of these rates are misleading.

Bait-and-Switch: Rates Too Good to Be True
Sam's Club is luring customers to its merchant services by offering a 1.49% processing rate that is too good to be true. As we can see from the following screen shot taken from a Sam's Club Merchant Payment Processing flyer, the 1.49% rate only applies to certain transactions. We must contact a representative to learn about additional undisclosed rates.

Undisclosed Rates and Fees

As directed by the fine print, I contacted Sam's Club via live chat to inquire about additional rates and fees. A transcript of the conversation is below. The content of the conversation has not been edited, and only the representative's name has been changed.

Where can I find information regarding non-qualified rates?

Hi Ben

Hi

qualified and unqualified on specifics factors

please tell me about your business

and I can provide that info

there is no specific place you can veiw rates and fees aside from here on on an application

I manage an auto parts store.

...generally used parts.

ok so you will be doing face to face processing w/ avg ticket below $340 correct?

Yes

ok just a sec for the pricing info

By the way, my name is (snip). You may want to jot down my contact info for future reference. I will be your Account Executive going forward: (snip).

I will be your Account Executive (responsible for saving our conversation and future questions and setup needs). Please provide your business name and a contact number so that I can save a record of your discussion for your reference so that you don't have to start over with a new rep. (and your sams club membership# if handy)

I'd rather just learn about your rates.

no prob, in order to create a record and obtain those rates, I have to save our conversation for future reference. can you atleast provide a business name to save things under?

RCS


RETAIL CARD SWIPE SETUP:
Visa/MC/Discover Credit Rate & Transaction Fee: 1.49% + $0.20
American Express (Amex) Rate & Transaction Fee: 2.89% + $0.15 (Optional)
PIN Based Debit & Signature Debit: 1.29% + $0.20
Batch Settlement Fee: $0.00 per batch (regular price $.39)
Yearly PCI compliance Fee: $39.95 (regular price $94.75)
Monthly Service Fee: Waived (regular price $7.95)
Statement Fee: Waived (regular price $5.95)
Application Fee: Waived (regular price $99)
Plus Membership Fee: Waived (regular price $100 + free annual renewals)

non qual (rewards, corporate, keyed) surcharge 1.49%

To be continued in a moment...

According to the Sam's Club representative, the surcharge for non-qualified transactions is 1.49%. That means that any credit card transaction that Sam's Club considers non-qualified will be charged at a rate of 2.98% (1.49% qualified + 1.49% non-qualified).

There is a big difference between the 1.49% rate that Sam's Club advertises, and the 2.98% rate that they actually charge on many transactions.

The absolute lowest traditional interchange rate that Visa currently charges is 1.51% for basic consumer credit card transactions. Sam's Club has no choice but to consider the majority of transactions non-qualified or the company stands to lose money on every merchant account it issues.

Equipment Leasing

Sam's Club and First Data are making quite a bit of money at the expense of small businesses by leasing credit card processing equipment.

Leases are frowned upon here at CardFellow because they are expensive and offer little benefit to businesses. In fact, processors in our marketplace are required to sign a legal agreement that specifically bans the practice of leasing equipment.

My conversation with the Sam's Club sales representative proves that leasing is not in a business's best interest. Sam's Club would be providing a much better service for its members by advising them to purchase equipment rather than leasing.

My live chat with the Sam's Club representative picks back up with equipment information.

terminal info

The machine and pin pad can be leased for $33.79/month. When leasing, the equipment is under full warranty for 48 months and tax deductible annually.

The package includes:
FD-100 Terminal with 4 year warranty
FD-30 Debit PIN Pad (with stand) with counter stand and contactless payment ability with 4 year warranty
Priority Customer Service Line for Payment Essential Customers including a Personal Chargeback Concierge
Online reporting for credit/debit and gift cards
Access to Merchantinsider.com online community
Free Overnight shipping.

There are two very big problems with Sam's Club pushing equipment leases. The first and most obvious issue is cost. The representative said the cost to lease a machine and PIN pad is $33.79 a month for 48-months. That's a total cost $1,621.92 for equipment that processors regularly offer in CardFellow's marketplace for just $195 (terminal & PIN pad). That's a difference of $1,426.92!

Proprietary Equipment
The second problem with Sam's Club lease is that the company is offering proprietary equipment that only operates on First Data's network. Any business that leases equipment from Sam's Club will be stuck processing with First Data for the duration of the four-year lease term. The only other option is to buy new equipment that is compatible with another processor while still paying Sam's Club and First Data a monthly lease payment of $33.79 for equipment that is not being used.

Cancellation Fee

The final downfall to Sam's Club merchant services is the three-year contract term and $90 cancellation. Sam's Club does not disclose the cancellation fee on its Web site. It wasn't until I specifically asked about a merchant account cancellation fee in the following conversation via live chat that I was told about the $90 penalty.

What is the contract term and early termination penalty?

The agreement 36 months, $90 cancellation fee. The trail (supposed to read: trial) lets you cancel under 90 days without the cancellation fee. I didn't get a chance to ask, how soon are you looking to be up and running?

Conclusion
Sam's Club is a great place to buy bulk groceries, but the company offers poor credit card processing services. You will be much better off using a service like CardFellow to get instant, competitive quotes that are based on interchange plus pricing, and that don't have cancellation fees or equipment leases.

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11 Responses to Sam’s Club Merchant Account Services – Buyer Beware!

  1. Paul says:

    I agree completely with the statements above.
    I wish I would have seen some of the reviews before I tried it.
    Sam’s Club uses sneaky pricing and billing with many hidden charges.

  2. Glenda Levin says:

    This has been a nightmare that I have been fighting for over a year. It is impossible to cancel. Sam’s Club sent me a letter telling me where to send back the credit card machine that I never used. I had it tracked, and they refused to accept it 3 times. Now it’s lost in post office somewhere and they are trying to charge me $700. I refuse to pay. I can back up every detail with a paper trail. This has really been a mess, and I refuse to pay for this scam. I wish I knew who in Sam’s upper management to contact. This is not right! I’ve been a loyal Sam’s club member, but not anymore.

  3. Janice says:

    Yes! so true, I can’t even explain how much they have robbed me and how many times and I’m STILL dealing with it. I wish I wouldn’t have gone with them, the sales man lied to me too, BIG TIME and I’m still paying for it to this day. Canceling with them is a joke. I’m still being charged, they will tell you on the phone that a credit is on it’s way when in fact you will just be billed again the next month! On top of paying the stupid PCI charge on each account even though you are compliant AND CANCELLED!! It’s insane. Save yourself lots of money and energy and just pay for the sams membership out of pocket!! IT’S NOT WORTH IT. Live and learn big time for me!

  4. Joe V says:

    They say you only get charged 1.80%, but in reality it can be much much more. It turns out I was paying 3.95%. I found another company for half the price. Closing the account is a pain. Then they make you reopen it to get paid for transactions that happened before you closed it. They were ripping me off just like the last company. I didn’t last a year with Sam’s Club. Now they have taken their fees from my account, but won’t deposit my last $909.00 transaction until they review it. It’s been 2 weeks now and they say it may be another 10 days! Sam’s Club is a real ripoff! Now I will close my Sams Club shopping card, too.
    .

  5. J says:

    Okay, so who should we use for our merchant services?

    • Ben says:

      The easiest way to find the most competitive credit card processor is to sign up here at CardFellow to receive instant quotes from as many as six different processors. Processors must abide by CardFellow’s terms in order to compete in our marketplace, and our terms exist to protect our clients and ensure that only competitive, honest quotes are offered. CardFellow also remains for support after you choose a processor to ensure pricing is locked for life, and that the processor continues to offer exceptional service.

  6. Mr. H says:

    I have a deli and shop at Sam’s every day. And every day the merchant services salesman pushes how much money they will save if I use their credit card processing.

    I signed up with Sam’s club credit card processing in January 2013, and the salesman guaranteed I would save money. I was told that I could cancel within 90 days if I wasn’t satisfied.

    Sam’s promised me:
    – 90-day trial period
    – $19.95 credit card terminal rental fee per month
    – Free terminal paper
    – Low processing fee – guarantee

    This was the salesman’s pitch to me before I signed up. I figured it couldn’t be too bad with all the guarantees, and I decided to give it a try. Well, things were bad from the moment I got my first statement. I called the salesman that set up my account for assistance, but he’s no longer with Sam’s.

    January 2013: My credit card sales were $8,000, and I was charged processing fees of $520 plus $39.95 for the lease through another company. That’s 6.99% of volume as a credit card processing fee, which is over 2.74% more than my previous credit card processing company.

    February 2013: My credit card sales were $10,000, and I was charged processing fees of $650 plus the $39.95 lease. That’s 6.89% of volume as a credit card processing fee, which is over 2.64% more than my previous credit card processing company.

    March 2013: My credit card sales were $12,000, and I was charged processing fees of $780 plus the $39.95 lease. That’s 6.83% of volume as a credit card processing fee, which is over 2.58% more than my previous credit card processing company.

    I pulled the plug in April and went back to my old credit card processing company. When I called Sam’s to close the account I was told the credit card machine lease was with another company, so I needed to call them to arrange a buy-back. I called the leasing company and was told I had a contract for 4 years, and I could not get out of the agreement unless I paid a $150 early cancellation fee. I told them about the 90-day trial period the salesman promised, but they said no such thing exists. I’m Still working on returning the credit card machine.

    Sam’s took out $245 plus $39.95 for the lease in May, too. I called to inquire about the charges, and I was told they were for interchange fees. I was also told that I may have more charges in June and July. Well, I guess I got screwed big time. Sam’s didn’t save me a penny, and as a matter of fact, robbed me blind.

    I’m still in process of returning the credit card machine so they won’t charge me every month. I’m still in process of figuring out what charges to expect in June and July. I’m still in process of figuring out a collection notice I received today (May 15, 2013) for $140 from Sam’s Credit Card Processing Department.

    Do not use Sams Club credit card processing. They will not save you money. They will take your hard earned money and give you a lot of headaches.

    Mr. H
    Houston, Texas

  7. Jim Bryan says:

    Lots of fees, I only did about $6000 in CC volume last year and paid about 8% in fees. This doesn’t include my PCI compliance fee! I initiated the service through Sams Club, I expected lower fees.

  8. Jane says:

    Used Sam’s club for my credit card processing but was forced out of business by Walmart buying the land from the shopping center owner and they did indeed add insult to injury by charging the $90.00 early termination fee. So not only do I lose the family business, but they caused the early termination and charge me for it! I also found that switching to Sam’s did not save the money they stated it would for the reasons stated above. Buyer beware!

  9. Nick Bennalick says:

    these people are very deceptive. I cancelled my account within the 1st 30 days when i saw what the terminal leasing and terminal insurance fees added up to. Sent the terminal back after several calls to get them to send a “call tag”. Now 3 months later they deduct another $150 from my account for so called “equipment return fees”. So much for no cancellation fees in the 1st 90 days.
    DO NOT DEAL WITH SAM’S MERCHANT CARD PROCESSING!

  10. Doug Pine says:

    Good information, just wish I had it in hand before signing with merchant services. My termination fees are a lot higher then 90 bucks. The only good thing about their equipment is I got the FD200 which takes checks. The number of bad checks it has saved me from having to chase down payment for kind of ballanced it out.

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