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Free-terminal programs have the potential to harm long-term merchant relationships if merchant-level salespeople do not fully disclose any additional fees associated with the promotions, says Wayne Koniac, president of American Money Systems, a Phoenix-based merchant-services provider. Typically, free-terminal programs offer merchants a point-of-sale terminal in return for a processing contract. "A lot of these guys give a free terminal and sign [merchants] up, and odds are they aren't going to see them again" or disclose any additional fees for other bankcard services associated with the program, says Koniac. "It's a hit-and-run sales process," he says. Merchants that discover the additional fees may stop trusting the agent and switch independent sales organizations, Koniac says. Sales agents for ISOs are not likely to get business referrals when they use hit-and-run sale tactics, he contends. Instead, agents should focus on signing and keeping merchant contracts using customer service, Koniac suggests. "Offer customer service instead of free terminals," he says.
