I have been in the merchant services business for many years and have rarely, if ever, come across a merchant who feels their credit card processing fees are FAIR. I think part of that is due to the lack of transparency given to them. There are numerous types of pricing models that can be implemented, and as you can imagine, most of them are more in favor of the processor, not the merchant. While in the field, I have always used the consultative approach with my merchants and taken care of their credit card processing needs. I ask numerous questions about your business and how you typically transact business. I’m always looking to determine what the absolute best and least expensive pricing model will be for them. Also, I look for other tools that can help them grow business with things like gift cards or checking services. I never recommend equipment or services that are not beneficial to your bottom line. Unfortunately, I’m sorry to say that many in our business don’t come close to taking the same approach.

American business owners like you are fed up with unfair, hidden, and excessive fees imposed by banks and processors (you know those fees make up the majority of your discount rate, right?). In October, Visa and MasterCard published their new Interchange Fees. Generally, adjustments are made twice a year (April and October). This time around, there were NO INCREASES that I could see but nevertheless I know of many merchant service providers who have imposed increases on their merchants (mainly those that have a tiered pricing model). Does this seem fair to you? I guess the answer is a resounding NO. This is again why, as I have written many times in the past, it is one more reason to price more transparently using a Cost-Plus pricing model. In this way, any increases that are not imposed on the provider can be transferred or “hidden” from you.

Studies have shown that Americans pay the highest transfer fees in the industrialized world. Forty-four countries around the world have enacted some form of transfer fee reform that has reduced fees. In my opinion, this industry has been broken and unregulated for far too long. In the early 1980s, the big banks, Visa and MasterCard demanded that credit card usage fees (a huge source of revenue for them) be protected from free market forces. Well guess what…they won that fight and the result has been an unfair and uncompetitive system of increasing transfer fees for a time that, due to advanced technology, their actual cost has been reduced.

Senate Bill 1212 has been proposed to STOP THE BLEEDING. This bill is an excellent starting point for the prevailing interchange fee situation in the US. The bill simply represents the proposition that powerful credit card companies should play fair and disclose prices and conditions. 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 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 gain a better and more comprehensive understanding of how this industry works. Most important to you is the need to better understand how pricing works and to absolutely make sure you know EXACTLY how much you are paying in fees for each card and type of transaction in your business. What are you waiting for? Pick up your phone, right now, and ask your representative or your customer service processor over the phone and ask the questions. If you don’t feel like you’re getting the right story or an outright dodge, start looking elsewhere. Thank you for reading!