Have interchange fees risen dramatically over the years? In reality interchange fees have risen very slowly, however, your credit card processing costs may have risen dramatically. That’s because years ago there was less competition in the industry, and few options for reducing pricing.
Key reasons why your credit card processing costs may have risen dramatically:
1. You have a price plan that does not allow you to access the many different levels of interchange. ie your price plan may have a qualified, mid-qualified, non-qualified rate, or something similar. When additional interchange categories are added, they may have all been automatically put into your non-qualified pricing, the most expensive. The most simplistic way to determine if you MIGHT have a problem is to look at your statement. If your statement has text like the image below, that’s OK if you are a small business, processing $5000-$10,000 per month. If you are processing $50,000 or more per month, then this is certainly not the right price plan for your business.
2. You are set up wrong- this could be terminal programming, improper account set-up at the processor, or other factors that have the same resulting affect. You are not processing at the least cost possible for the type of card presented and transaction type initiated. This is nearly impossible for a merchant to figure out since you would have to have specific industry knowledge as well as access to specific reporting to help you identify there is a problem.
3. The cashiers are making mistakes. This takes three things needed to identify this probem and correct it. First, you need the right price plan and set up per the above items. Second, you need a basic understanding of interchange qualification. Third, you need detailed reporting so that you can recognize the problem areas.
The long term solution is a processing partner who will give you the right pricing plan, the right tools, and the training to help you permanently manage your credit card processing costs. They are few and far between, but if you qualify, we can probably help you.