credit card processing rates increase

As previously reported, Visa & Mastercard rates typically increase this time of the year. Most merchants have seen the effect in their May statement, or will on their June statement.

One merchant I recently analyzed received a notice that their non-qualified rate was increasing to 4.09%! As a construction industry supplier, they have a large base of commercial customers, and good portion of them use corporate cards or rewards cards. In effect the merchant was going to be paying 4.09% on more than half their orders. It’s hard to remain competitive in their industry with those kinds of rates.

My first recommendation was to get them off the pricing plan they were on, that gave them a qualified and non-qualified rate. Instead, I recommended an interchange cost plus pricing plan. This ties every transaction directly into the actual card processing costs set by Visa & Mastercard instead of some bank defined plan that is designed to increase profits of their processor.

It’s very important for all merchants to closely examine their rates this month. Divide your actual processing costs into your net sales to get your effective rate. Is it what you expected? If you are not sure if you are at the average for your industry, please call us for an independent opinion.