Credit Card Processing Rates! Enlightened, Confused, or Mad? Make it better!

I've been in the merchant services business for many years and rarely, if ever, have I come across a merchant that feels that their fees for processing credit cards are FAIR. I think part of that comes as a result of a lack of transparency that is provided to them. There are numerous types of pricing models that can be implemented and, as you might imagine, most of them are more in favor of the processor, not the merchant. While in the field, I have always utilized the consultative approach with my merchants and taking care of their credit card processing needs. I ask numerous questions regarding their business and how they typically transact business. I'm always looking to determine what the absolute best, least expensive, pricing model will be for them. In addition, I search for other tools that may help them increase business with things like gift cards or check services. I never recommend equipment or services that won't be beneficial to their bottom line. Unfortunately, I'm sad to say, many in our business don't come close to taking that same approach.

American business owners, like yourself, are fed up with the unfair, hidden, and excess fees imposed by the banks and processors (you do know that those fees make up the majority of your Discount Rate, don't you?). In October, Visa and MasterCard posted their new Interchange Rates. Typically, adjustments are made twice a year (April and October). This time around, there were NO INCREASES that I was able to see but yet, I know of many merchant services providers, that imposed increases to their merchants (primarily those that are on a Tiered pricing model). Does this seem fair to you? I'm guessing the answer is a resounding NO. This, once again, is why, as I've written about many times in the past, is all the more reason for being priced in a more transparent form utilizing a Cost-Plus Pricing model. This way, no increases that aren't actually imposed on the provider, can be passed on or "hidden" from you.

Studies have shown that Americans pay the highest swipe fee rates in the industrialized world. Forty-four countries around the world have enacted some form of swipe fee reform that has brought rates down. In my opinion this industry has been broken and unregulated for far too long. Back in the early 1980's, big banks, Visa and MasterCard demanded that credit card swipe fees (a huge source of income for them) be shielded from free market forces. Well, guess what....they won that fight and the result has been an unfair, uncompetitive system of escalating swipe fee charges to you during a time that, do to advanced technology, their actual cost has gone down.

Senate Bill 1212 has been proposed to STOP THE BLEEDING . This bill is a great starting point to the interchange fee situation prevalent in the US. The bill simply stands for the proposition that powerful credit card companies should have to play fair and disclose prices and terms. I encourage you to stand up, join business owners like yourself, take action and be heard and add your name to the petition by going to THIS SITE .

With all that being said, you know how quickly things move through the legislative process so what can you do for yourself in the meantime? You got it....you need to be more proactive and get a better, more thorough understanding of how this industry works. More importantly to you, is the need to get a better grasp on how pricing works and absolutely make certain that you know EXACTLY what you're paying in fees for every card and transaction type in your business. What are you waiting for? Pick up your phone, right now, and get your rep or your processors Customer Care on the phone and ask the questions. If you don't feel like you're getting the straight story or an outright runaround, start looking elsewhere. Thanks for reading!