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Wells Fargo Merchant Services provides small-business merchant accounts and connects these merchant accounts to First Data credit card processing services. There are a few reasons why this merchant account might be the right move for your business — namely if your business already has a bank account set up with Wells Fargo — but the service has its fair share of downsides, including a $500 early cancellation fee. Consider shopping your options to see if you can find a merchant account that has fewer add-on fees and is a little more transparent with what you’re getting.
Wells Fargo is technically an acquiring bank in this whole exchange. When you sign up for Wells Fargo Merchant Services, Wells Fargo won’t be your direct credit card processor.
Wells Fargo is the acquiring bank that fronts the money you’re owed from your credit card transactions, and First Data is the credit card processor that clears the customer’s transaction with their credit card issuer.
Wells Fargo doesn’t fully explain this relationship on its Wells Fargo Merchant Service website. But what you really need to know is that when signing up for a Wells Fargo Merchant Services account, you’ll be working with both Wells Fargo Merchant Services and First Data. For example, all of the physical equipment used to process credit cards in your store is provided by First Data Global Leasing.
A merchant account from Wells Fargo Merchant Services will make it so your business can accept credit card and debit card transactions from all four of the major credit card issuers in your physical store, online and on mobile devices.
But remember, all the credit card processing is done through First Data, so if you hear “Wells Fargo credit card processing,” know that it’s likely referring to First Data credit card processing through Wells Fargo Merchant Services.
Beyond a general merchant account and connection to First Data credit card processing, here’s a list of what else Wells Fargo Merchant Services offers:
Terminal sales or leases. As an account holder with Wells Fargo Merchant Services, you’ll have the ability to purchase terminals for your business. If you choose to rent your terminal, you can set up a lease with First Data Global Leasing.
Mobile processing. You can also accept and process mobile payments with Apple Pay, Android Pay and more.
Data encryption. Wells Fargo Merchant Services’ “TransArmor solution” will help protect your customers' card information with encryption technology.
EMV support. Wells Fargo Merchant Services also helps your business accept EMV-chip cards.
Payment gateway. Having a Wells Fargo Merchant Services account will also help support your e-commerce presence. You can set up a payment gateway through First Data’s Payeezy Gateway so you can accept payments online. You could also choose to use CyberSource or Authorize.net as your payment gateway.
Fees and rates
If you visit the Wells Fargo Merchant Services website, you’ll find that Wells Fargo Merchant Services fees aren’t readily available.
You can take a look at its rates and fees section on its frequently asked questions page. But if you were to ask, “What will Wells Fargo Merchant Services fees cost my business?”
The answer is “it varies.”
In general, Wells Fargo Merchant Services fees depend on:
The kind of business you run.
Your business’s processing volume.
Your processing method (in person, online or by phone).
The kind of card your customer uses.
And simply how your merchant account is set up.
What Wells Fargo Merchant Services fees include
While we don’t know exactly what Wells Fargo will charge you — and you won’t know exactly until you call the Wells Fargo Merchant Services phone number and ask for a quote — here’s a general idea of what might show up on your statement:
Discount rate. Wells Fargo refers to the discount rate as service charges. They’re essentially the percentage Wells Fargo takes from a transaction as the cost of authorizing, processing and settling a transaction.
Interchange charges. Wells Fargo Merchant Services fees will include an interchange fee. This is a variable fee that compensates the card issuer for advancing the payment to the merchant (you) until the settlement from the cardholder. You pay this fee on your Wells Fargo Merchant Services statement, but the exact amount you pay depends on the card issuer.
Transaction fees. Wells Fargo will also charge you a fixed-rate transaction fee (for instance, 2.5% of each transaction no matter what), or a fixed-rate transaction fee that varies based on the credit card issuer of the given transaction. Unfortunately, Wells Fargo doesn’t make it clear what these rates will be, as they vary from account to account.
Cancellation fee. One fee that Wells Fargo does make clear is its cancellation fee. If you cancel your Wells Fargo Merchant Services account, you’ll face a $500 cancellation fee if you’re processing less than $1 million per year in transactions. If you’re processing over $1 million per year in transactions, you’ll be charged both the $500 early termination fee and liquidated damages equal to “six times the highest amount of revenue in any single calendar month during the initial term or any renewal term.”
A caveat about Wells Fargo Merchant Services fees
You won’t know exactly what you’ll be charged until you talk with one of its sales representatives. The rate structure you’ll get depends on the kind of business you run and how your account is set up, but if you’ve been a Wells Fargo customer in the past, you might be able to take advantage of relationship-based rates.
All four major credit card networks accepted
With Wells Fargo credit card processing services, you can accept all the major credit cards for your business.
But when it comes down to it, accepting all the major credit cards is pretty run-of-the-mill for merchant services.
Different e-commerce platform integrations
Wells Fargo Merchant Services has a strong offering for businesses that host many of their transactions online.
You can use Wells Fargo’s own SecureSource Web Payment Account, which accepts all major credit cards, completes transactions on the same day of purchase and offers a wide range of security protections.
But Wells Fargo also allows you to use Authorize.Net, CyberSource, SecureNet Payment Systems, PayFlow Gateway and almost any other payment gateway. When it comes to offering online payment processing, Wells Fargo’s flexibility is an added plus.
Possibility of next-day funding
Whereas most credit card payment processing takes 48 hours, Wells Fargo offers the possibility of getting your payments processed the day after the purchase.
If the speed at which you get your credit card payments deposited into your business checking account is important to you, you’ll benefit from this feature. Any credit card transactions from Visa, MasterCard, Discover or American Express networks will come in the next day.
The next-day funding benefit is only available to you if you have your business checking account with Wells Fargo.
Unclear rates and fees structure
Wells Fargo is very vague across all its informational resources on fees and rates. It’s really unclear what your rate structure will be and how that rate is determined.
While most of Wells Fargo Merchant Services fees are dependent on what services you specifically choose for your business, it’s better to work with a merchant account provider that’s fully transparent with its rates and fees.
After the discount rate, interchange fees, transaction fees and so on, these merchant accounts can really add up.
Third-party payment gateway
It’s crucial to know that, if you sign up for Wells Fargo Merchant Services, you’ll be working with both Wells Fargo and First Data, the credit card processor.
Although this isn’t necessarily a problem, you will be working under two different contracts.
First Data could spike its rates, making your overall monthly statements more expensive. Or it could change its security features while Wells Fargo’s services remain the same.
Steep cancellation fee
Wells Fargo Merchant Services fees will include an early termination fee of $500.
Wells Fargo offers to “buy out” your existing contract with another merchant account provider in order to win your business, paying a portion or all of your cancellation fee. (You can only qualify for this deal if you’re doing at least $100,000 in processing annually.)
It says you’ll receive up to $500 when you switch to Wells Fargo Merchant Services.
This is pretty misleading. You won’t get a check deposited into your bank account when you switch from your current provider to Wells Fargo. You’ll simply get refunded for whatever your cancellation fee was, up to $500.
And back to Wells Fargo’s own cancellation fee: $500 is quite steep.
It calls $500 the “industry standard,” but many merchant account providers don’t charge an early cancellation fee, like Fattmerchant, Dharma Merchant Services and Helcim.
If you’ve seen them in the news, then you know that Wells Fargo hasn’t had the best few years.
In September 2016, the Consumer Financial Protection Bureau fined the bank $100 million for the widespread practice of opening unauthorized credit cards and deposit accounts. In April 2018, the CFPB assessed a $1 billion penalty against the bank for violating the Consumer Financial Protection Act with its auto loan and mortgage practices.
While these scandals haven't affected Wells Fargo Merchant Services consumers specifically, complaints of shady sales tactics and lack of full disclosure with fees within Wells Fargo are a concern.
A version of this article was first published on Fundera, a subsidiary of NerdWallet.