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First Data is one of the largest merchant services providers in the world. It can provide businesses with every type of solution they need to manage commerce, including payment processing, POS, payment gateways, mobile payments, and more. First Data sells its products through a vast network of third-party sales organizations, and in most cases pricing is quote-based.
As a merchant services provider, First Data is downright massive. The company says they serve 6 million merchants in 100 countries around the world. On average, First Data says they process 3,000 transactions per second and over $2.4 trillion every year. But for a service that seems ubiquitous, First Data isn’t exactly a household name.
That’s because First Data delivers their services via a vast network of partners and subsidiaries, including many names you probably are familiar with: Clover POS, Bank of America Merchant Services, Chase Merchant Services, Wells Fargo Merchant Services, and even Western Union.
If you’re in the market for merchant services, you’ve probably browsed some of First Data’s products—whether you meant to or not. So let’s try and cut out the middleman and learn exactly what you can get from this merchant services giant and their vast network of resellers. But before we can do that, you need to learn a bit more about how First Data conducts business.
Consolidation in the merchant services industry has led to the creation of a handful of mega-providers that account for an outsized proportion of all credit and debit card transactions. First Data is among these mega-providers, along with companies like Worldpay and Elavon. The model most of these companies follow is to acquire smaller merchant services businesses (First Data, for instance, acquired Clover in 2013) and resell their services through independent sales organizations (ISOs), independent software vendors (ISVs), and value-added resellers (VARs).
These types of businesses have a mixed reputation. Some sales organizations will offer you a fair rate and a short-term contract, while others will try and lock you into a deal that is not in the best interest of your business (long-term contracts, hidden fees). Why? It’s hard to say. Some sales agents are just interested in getting as big of a commission as possible, while other organizations prioritize sales volume over quality of service.
All of which is to say, if you work with a third-party sales organization when trying to acquire First Data merchant services products, tread carefully. They’ll usually give you a quote-based price, and you should try to negotiate it down. The higher your business’s transaction volume, the more leverage you have. If it can be helped, try to acquire your merchant services directly from First Data or one of their subsidiaries like Clover. This way, you’re likely to experience less variation in terms of pricing.
And when you go to First Data for merchant services, you’ll have a buffet of options to choose from. This is the benefit of going with a large merchant services provider like First Data. From merchant accounts and payment processing to POS devices and business analytics, everything your business needs to manage commerce can be found with First Data.
Let’s learn a bit more about all the solutions First Data provides to business owners.
First Data provides merchant services for enterprise businesses, financial institutions, governments, and a variety of other organization types. But if we were to list all of the solutions First Data offered, we’d be here awhile. Instead, we’re going to focus specifically on the products First Data promotes for small business owners, which are offered mainly through Clover. They are as follows:
First Data provides POS systems via their subsidiary Clover. Clover offers small business owners two software options with which they can run transactions. They are as follows:
The POS software needs POS hardware to run on. Clover offers four options:
Secure payments is another service First Data outsources to their subsidiary Clover. With Clover Security all card payments are encrypted and tokenized, helping merchants remain PCI compliant. In the event of a data breach, Clover Security provides merchants with a liability waiver for card association fines and expenses of up to $100,000. Clover will also monitor your POS system for possible tampering, and provide you with a dedicated specialist to field your security questions.
If your business wants to process checks and ACH payments, First Data will hook you up with Clover Check Acceptance. This service allows you to securely convert paper checks to electronic transactions at your POS, and accept ACH transfers online. You can also arrange to receive recurring payments, and all funds are deposited into your business bank account within two days.
Next up in First Data’s list of features offered through Clover is a rewards program called Clover Rewards. With Clover Rewards you can set up a rewards program for your business that allows your customers to collect redeemable points on sales. Clover Rewards also allows you to send customized marketing texts and emails to customers and collect data that reveals customer preferences.
Another way to endear yourself to customers is with the Clover Gift Card program. This service allows you to distribute gift cards to your customers that are customized with your business’s branding. Your Clover POS can also track gift card balances.
If you’re an ecommerce merchant, First Data will provide you the means to process digital transactions with the Payeezy Gateway. The Payeezy Gateway integrates with over 70 ecommerce platforms and can process a variety of different credit card types as well as PayPal payments and electronic checks. It can also convert foreign currencies, allowing you to accommodate customers all over the world.
Collect data on your business with Clover Insights. This reporting suite will track sales data and generate reports that will help you make better business decisions. With Clover Insights you can track the impact of your marketing efforts, perform customer segmentation, identify seasonal patterns, and learn about customer behavior and buying habits.
Your business can receive merchant cash advances with Clover Capital. With a Clover Capital merchant cash advance, Clover will advance you a percentage of your daily credit card and debit card sales, plus a fee. Clover promotes a simple, one-page application process, and says eligible merchants could start receiving funding in as little as three days.
First Data provides customer support via phone and live chat on weekdays during normal business hours. They also promise to reply to email inquiries within 24 hours. On their website there is a Client Support portal with an extensive amount of documentation on all the services they offer.
As mentioned earlier, First Data will likely quote you a price based on the services you need, your industry, and your business’s transaction volume, along with other factors. You’ll likely pay a lump sum for your hardware, a monthly fee for your software, and a per-transaction fee for payment processing. First Data uses interchange-plus pricing to assess fees on credit card transactions, with higher volume merchants getting better rates.
Depending on who you go through to get your services, you will either be locked into a multi-year contract or a pay-as-you-go plan. The latter option is preferable, as it allows you to stop using First Data whenever you want, whereas multi-year contracts usually come with early termination fees.
The best practice would be to go directly through Clover to acquire your merchant services, as Clover would likely offer more transparent pricing than what you’d experience with an ISO.
Here are what we see as the benefits of using First Data as your merchant services provider:
The main benefit of going with any large merchant services provider is the variety of solutions they can offer your business. Most small business owners don’t want to go through multiple vendors when they have questions or concerns about their merchant services. First Data makes life easier by providing you with one service to go through for whatever you need to manage transactions. That sort of convenience can’t be underestimated.
Large merchant services providers become more valuable partners the bigger your business gets. This is because they will offer you their products and services at lower rates, given your transaction volume is higher. Therefore, you can trust that First Data will be a reliable partner as your business evolves, because your success is also their success.
Working with a large merchant services provider has its drawbacks. Here are First Data’s:
Wherever possible, we recommend avoiding merchant services providers who primarily sell their product through third-party sales organizations. As we said earlier, resellers often have their own agenda, so they might try to push something that is not in the best interest of you or your business. This isn’t always the case, but it could happen so it’s always a risk. You’re better off going with a merchant services provider that offers transparent pricing information.
Here is how First Data is ranked by customers on the major review platforms:
Customers who rated First Data poorly complain of hidden fees and poor customer service—and those who dislike First Data strongly dislike it. Many of the negative customer reviews come from customers who made their purchases through ISOs.
On the positive side of things, customers who use the Clover products seem to be fairly satisfied. They say Clover is easy to set up and use, and that First Data is able to provide them with a range of additional products for whatever needs may arise.
If you have reservations about First Data (or Clover), here are some alternatives to compare it to:
Modern payment service providers like Square are disruptors in an industry dominated by companies like First Data. Square’s value proposition is tech-forward solutions at affordable, transparent prices. If you choose to go with Square, you’ll get a free mobile card reader and POS software, plus a straightforward payment processing fee of 2.75% per transaction. In addition, you’ll get to pick and choose from Square’s popular POS hardware to complete your system. Square also integrates with a variety of payment gateways for ecommerce merchants.
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If you’d prefer to work with a large merchant services provider, Worldpay offers a bit more transparency than what you’d find with First Data. Worldpay has payment processing rates of 2.9% + $0.30 per transaction. Higher volume merchants can qualify for a lower rate of 2.7% + $0.30 per transaction. Small business owners also get a little bit more variety in terms of product choices with Worldpay, whereas First Data mainly promotes Clover solutions.
Large merchant services providers like First Data prioritize enterprise clients over small businesses. If you have a high transaction volume and need a broad range of services, First Data can probably provide you with a good solution at a great price. Small business owners, on the other hand, have less leverage working with a company like First Data—and it seems some come away with deals that aren’t good for their business. If you’re a small business owner looking for merchant services, you should research your options thoroughly, scour reviews, and consider options that let you sign up for a free trial, before fully committing.