If you’ve looked at one of your merchant processing statements lately, you’ve probably noticed that you’re paying twice for each transaction you process. This won’t be the case if you’re on flat or bundled pricing. But if you’re on interchange-plus pricing, you’ve probably noticed that there are both interchange charges and processing charges on each transaction. So why are you double-paying? The answer lies in the way that fees are collected by multiple parties that are involved in enabling that transaction.
To begin with, card brands like Visa, Mastercard, Discover and American Express all have mandatory charges that are passed on to you, the merchant, every time one of their cards is used for a purchase. The most well-known and expensive of these is an interchange. Interchange varies from card brand to card brand, by type of card (business, rewards, etc.), and by how the card is processed (swiped, keyed, etc.). These charges usually take the form of a percentage of the transaction volume plus a fixed cost per transaction. For example, a Mastercard World Elite Airlines card will cost the merchant 2.3% of the transaction + $.10. Interchange fees can be as low as a few tenths of a percent up to more than 3% per transaction. In addition, all merchants pay card association fees every month. Unlike interchange, which is assessed on a per-transaction volume, these fees are assessed to the total monthly volume and number of transactions that the merchant processed for a specific card brand that month. These fees are typically between .1% and .2% of monthly volume and around $.02 per transaction. These fees are all set by the card brand and shared between the bank that issues the card and the card company. Unfortunately, there is no way to negotiate or change these fees.
However, the second type of fees can be changed and can be the difference between the optimal and sub-optimal cost for your business. These fees are controlled by the processor and go directly to the processor without being distributed elsewhere. For some processors, these are flat or bundled fees that offer no transparency into where interchange ends and processor fees begin. For others, there is a discount and per item fee that is applied to each transaction in addition to the interchange charged for that transaction. As if that wasn’t enough, processors will also charge other miscellaneous fees, fixed monthly fees, and even misrepresent mandatory card fees to add to their margins. There can be over 100 parts of your statement where processors can make additional money off your account.
So do you think you’re overpaying? We can help. Scopifi has helped merchants of all industries and sizes optimize their costs and take back control of their relationship with their processor. Our 11-point audit will identify every area that you are overpaying and let you know how much you could be saving each month on processing fees. Simply attach your most recent statements below and enter your information, and one of our payments industry experts will be in touch to help you take back the money that you’re due.