Capital One Merchant Services Review: Is it a Good Fit for SMBs?
Capital One Merchant Services provides merchant accounts for businesses. Its website boasts speedy debit and credit card processing and allows merchants to accept Visa, American Express, and MasterCard.
Capital One Merchant Services offers features that small business owners may not ordinarily have access to. These include fraud mitigation tools, trending payment technologies, and customer data insights, among others.
But, beyond the bells and whistles, does Capital One Merchant Services truly stack up against the competition?
Let’s review Capital One Merchant Services to discover if it offers small business owners a competitive value proposition.
Capital One Merchant Services Through WorldPay
Capital One is a major bank that’s based in the U.S. The bank was founded in 1994 and has a pretty good reputation, considering the scale of its offerings. However, Capital One Merchant Services doesn’t really sell services from Capital One Bank. That’s because Capital One provides merchant services through WorldPay, which is a giant international direct payment processing company.
Capital One is technically just a reseller of WorldPay Merchant Services. Merchants will deal with WorldPay more often than Capital One when customer service or payment issues arise. This means we have to take a look at WorldPay as well as Capital One to understand their offerings.
What Does Capital One Merchant Services Do?
Capital One Merchant Services sells WorldPay Merchant Services at the price-points WorldPay sets. However, WorldPay gives resellers (in this case, Capital One) some flexibility over contract lengths and prices. This means there’s room for negotiation when it comes to individual contracts for SMBs. Most merchants report getting lower prices by going through a reseller than negotiating directly with WorldPay sales reps.
Capital One Merchant Service Sales and Marketing
Capital One doesn’t do a ton of outside-the-box marketing for its Merchant Services program. Instead, Capital One focuses on advertising to customers with existing personal Capital One accounts. Satisfied customers can sign up for Capital One Merchant Services as an extension of their existing account. As we now know, however, those that do this are often subjected to a very different payment processing experience.
Capital One also doesn’t hire independent sales reps to hawk its Merchant Services. This may not be a good thing, however, since WorldPay sales reps have a less-than-stellar reputation. (For more on WorldPay’s sales practices, see the “Capital One Merchant Services Reviews” section below.)
Credit Card Processing Fees, Products and Services
Hate to say it, but the cost-per-transaction on purchases with Capital One’s Merchant Services program isn’t competitive. WorldPay charges 2.90% plus $0.30 for swiped transactions. And WorldPay charges 3.30% and $0.30 for keyed-in (card not present) transactions. This means the more transactions and revenue a business processes, the more Capital One makes.
Compare this to Payment Depot’s Basic Membership fee of $49 a month plus $0.15 per transaction and interchange. (The average interchange rate is 1.81% for credit card payments and 0.3% for debit card transactions.) Payment Depot offers wholesale rates on credit card processing, making it easier for small businesses to make and keep profits. Use Payment Depot’s simple Rate Calculator to see if they could help you save on credit card processing.
Through WorldPay, Capital One offers a three-year service contract with a significant termination fee. The early termination fee fluctuates depending on the details of each individual account, but can it reach up to $495.
That’s a significant hit for any small business owner!
WorldPay also charges above average rates for a monthly PCI Compliance Fee and reportedly charges an annual “IRS Reporting Fee.” And retailers have to pay to lease card processing equipment each month.
Pros and Cons of Capital One Merchant Services
Need to make an at-a-glance comparison of Capital One versus other Merchant Services providers? Here’s a quick list of the pros and cons of Capital One Merchant Services.
Pros
- Potentially lower rates on WorldPay through Capital One Merchant Services
- Phone and email support
- Truthful sales tactics
- Realistic price quotes
- Data security tools included
- Accepts swipe, EMV, contactless, phone order, email invoicing, PayPal® and other payment methods
- Built-in reporting
- Accept mobile reader payments, as well as payments from smart terminals and hosted web pages
Cons
- Expensive prices on each transaction
- No unique contract terms
- Lengthy three-year contract
- Higher than average contract termination fee
Capital One Merchant Services is a decent option for SMB retailers that process very few, low price point transactions. However, the costs add up quickly for any company with substantial revenue.
CapitalOne Merchant Services Reviews
Capital One Merchant Services doesn’t have a Better Business Bureau rating. It doesn’t even have its own profile. Neither does WorldPay, for that matter. Merchants on review sites such as Trust Pilot and Consumer Affairs have a lot to say, both good and bad, about Capital One Bank.
Most review sites, on average, rate Capital One Bank as a whole between 3 to 4 stars. However, none of the review sites I was able to locate featured Capital One Merchant Services as its own entity. This makes it really hard to get a read on the discourse surrounding the brand.
WorldPay Merchant Services may not have BBB profile, but there are a lot of reviews that feature merchant experiences with the company. WorldPay has more than 400 complaints on consumer review sites. However, whether this is simply due to the size of the company or actually reflects upon its offerings remains to be seen.
The most prominent complaint about WorldPay Merchant Services regards withholding funds from retailers. However, unforeseen charges come in a close second. The big caveat here is that none of the negative reviews about WorldPay discuss Capital One Merchant Services.
Is Capital One Merchant Services Good for SMBs?
The short answer? It depends on how many transactions a business processes and on the size of those transactions. Most companies that process more than $1,000 a month would benefit from a wholesale approach to payment processing. Capital One Merchant Services doesn’t offer this, so retailers wind up paying more for payment processing with each dollar they make.
Wholesale payment processors charge no fees on top of the credit card company’s rates––Visa, MasterCard, American Express, etc. So, retailers only pay for a flat monthly fee and can put their increased profits back into their business. With a wholesale credit card processor like Payment Depot, the more you make, the more you keep! That’s why Payment Depot is the highest-rated national credit card processor on the market.
FAQs about Capital One Merchant Services
Q: What are Capital One Merchant Services?
Capital One Merchant Services provides merchant accounts for small and medium businesses, offering features like fast debit and credit card processing (Visa, American Express, and MasterCard). Other offerings include fraud mitigation tools, trending payment technologies, and customer data insights.
Q: Who administers Capital One’s merchant services?
Although the services bear the Capital One name, they do not come from Capital One Bank. Instead, Worldpay, a large global payment processing company, provides these services. Hence, Capital One serves as a reseller for Worldpay Merchant Services.
Q: How do Capital One Merchant Services prices compare to WorldPay’s direct prices?
WorldPay allows resellers like Capital One flexibility over contract lengths and prices. Most merchants report lower prices through a reseller rather than negotiating directly with WorldPay sales reps.
Q: What is the cost of transactions using Capital One’s Merchant Services program?
The cost-per-transaction with Capital One’s Merchant Services program can be relatively high. WorldPay charges 2.90% plus $0.30 for swiped transactions and 3.30% and $0.30 for keyed-in transactions.
Q: What is the duration of service contracts under Capital One Merchant Services? Is a termination fee applicable?
Through WorldPay, Capital One offers a three-year service contract with a significant termination fee. The early termination fee fluctuates depending on the details of each individual account but can reach up to $495.
Q: What are the key advantages of Capital One Merchant Services for small businesses?
Capital One Merchant Services has several benefits. SMBs can get lower rates on WorldPay through Capital One Merchant Services. Other pros include phone and email support, truthful sales tactics, realistic price quotes, and a variety of included data security tools.
Q: What are the major challenges or downsides of Capital One Merchant Services for SMBs?
Challenges with using Capital One Merchant Services may include high transaction prices, standard contract terms, longer-than-average three-year contract duration, and higher-than-average contract termination fees.
Q: Is Capital One Merchant Services a good fit for all SMBs?
It largely depends on how many transactions a business processes and the size of those transactions. Most companies processing over $1,000 a month may optimize their payment processing costs, with wholesale payment processors charging no additional fees on top of the credit card company’s rates.
Q: What is the overall reputation of Capital One Merchant Services in the market?
Capital One Merchant Services doesn’t have a specific Better Business Bureau rating, and its reputation varies across different review sites. The most common complaints about associated WorldPay Merchant Services include withholding funds from retailers and unexpected charges.