Though we have more than our fair share of chains in Westport, we’re also home to small businesses whose founders have figured out how to transform their skills and passions into sustainable livings. In addition to being inspiring, these entrepreneurs contribute goods and services that enrich our community because they’re provided by people who understand and are a part of our community. I’m happy to introduce our sponsor Reliance Merchant Services Inc., whose founder exemplifies those values.
A mother of two and longtime resident of Ridgefield, Mary Kate Gobleck founded her company when she was expecting her first child. Reliance provides credit and debit card processing for retail, Internet, mail-order and fundraising organizations. Eight years later, she is proud of her company’s A+ Better Business Bureau rating, 98 percent client retention rate, and in-house customer service. Among other partnerships and alliances that Mary Kate has formed along the way, Reliance is the preferred merchant services referral partner of Fairfield County Bank Corp.
A native of Fairfield and the youngest of eight O’Connor children, Mary Kate has established a Corporate Give-Back Program. In 2010, Reliance provided funds to Kids in Crisis, a Greenwich based children’s shelter. In 2011, Reliance began supporting the “John and Barbara O’Connor Education Fund,” a program through the Fairfield County Community Foundation set up in Mary Kate’s parents’ memory to provide mentoring and scholarships to Bridgeport high school students.
Gobleck said, “I have modeled my whole business and practices—and always will—after my father,” who was a partner at an insurance firm in Bridgeport and who she lost in 2010. The fund is a fitting tribute to her parents’ dedication to Bridgeport’s youth. Gobleck’s mother, who passed away in 1988, was a grammar school teacher and UCONN graduate, and her father was a Fairfield University graduate and coached and supported Bridgeport youth hockey for many years.
She and her senior vice president Sandie Griffin have 20 years of industry experience between them, and on a Thursday afternoon, Gobleck sat down with me in her cozy office at 9 Grove St. in Ridgefield to explain her complicated industry and provide a few tips for businesses of all sizes.
As business owners who accept credit cards know, they’re obliged to sacrifice a percent of purchase to the acquiring banks, MasterCard/Visa, via a credit card processor. So if a business takes in $10,000 of credit card payments in a month for goods or services, it’s likely that at least $150-$450, depending on card types accepted, of that amount is paid out in processing fees.
But where is it going? Gobleck explained that approximately 95 percent or more goes to the acquiring banks and less than 5 percent goes to MasterCard and Visa Associations. Though rates are fairly stable in this regulated part of the industry, the Durbin Amendment of Oct. 2011 has made it important for businesses to have their accounts analyzed to determine whether savings are possible.
As with any industry, unscrupulous processors concoct schemes to pad their pockets at business owners’ expense, so Gobleck shared three pitfalls small business owners should watch out for:
Don’t lease credit card processing equipment
Card swiping equipment is available to business owners for lease, rental, or purchase, and according to Gobleck, leasing is to be avoided because it doesn’t make financial sense.
“A machine might cost you $350, but with a lease, you may end up paying $30-$40 per month for anywhere from 24 to 48 months,” she explained. “You’ve paid for the machine many times over during the terms of the lease.”
If purchasing equipment outright is not an option, Gobleck recommends a rent-to-buy contract that sets up manageable monthly payments for equipment.
Beware of too-good-to-be-true promises
“If it seems too good to be true, it usually is,” Gobleck warned.
Equipment leasing is a great example of this. Leasing agencies use credit card processing reps as their intermediaries. The reps may promise low processing rates to businesses but then fleece them on equipment leases. In return, leasing agencies reward those reps with large up-front commissions. And because lease contracts—non-negotiable and non-cancellable—are negotiated between business owners and reps directly, processing companies have no authority over the leasing terms.
“Processors will make all kinds of promises to save business owners money, but what’s the basis of it?” asked Gobleck. “Know what you’re getting into for the long term.”
Get and keep copies of contracts, and read the fine print
Gobleck marveled that clients and prospects almost never think they’ve signed a contract, but in actuality, they have. It just depends on how severe the terms are.
“I cannot stress this enough,” Gobleck said, “know your contract terms, especially auto-renewals and cancellation fees imposed on you if you attempt to close out of the contract early.”
Trying to extract a copy of your contract from a leasing company or credit card processing company can be daunting and time consuming. As someone who spent six months trying to cancel a gym membership, may I say, good luck with that!
Reliance Merchant Services Inc.
9 Grove St., Suite B
Ridgefield CT
(203) 438-5961