A retail merchant once called our firm and after I outlined all the rates, she jokingly remarked that she shouldn’t have to pay any fees because she was “taking all the risk.”  While I appreciated the joke, it’s not funny to many retail merchants who must apportion part of their hard earned profit to credit card processing companies.  The credit cards swipe, and each time, money figuratively goes out of the cash register.

The retail merchant community is growing increasingly disenchanted with the card holding associations, the banks, and their merchant account counterparts.  Among their litany of complaints include the following:

- The rates are consistently increasing – Visa and MasterCard typically adjust their interchange rates (in essence, the rates charged to merchant account providers) in April and October.  In turn, the vast majority of credit card processing companies pass through these rate increases.  Merchants receive seemingly cryptic notices about the increases but the new pricing matrixes may be complex.

Intermittently, there may be new surcharges.  Two that were implemented over the past year include Visa’s “Acquirer Processing Fee” (APF) and MasterCard’s “Network Access and Brand Usage” (NABU).  These surcharges amounted to an approximate 2 cent charge for all sales and credit/refund transactions.  Many merchants would in turn like to give Visa and MasterCard their 2 cents about this quite “imaginative” fee, assessed just for the cardholder using Visa and MasterCard cards.

Large retail superstores, such as Walmart, pay less for credit cards that swipe.  More and more small and mid-sized businesses are complaining about the discrepancy.  While volume dictates pricing in many areas of our economy, many merchants are rankled by any perceived “preferential treatment” and concomitant price breaks.

- The rates paid by US business owners/consumers are the highest world – purportedly up to five times higher than some countries.  Indeed, Visa and MasterCard collect billions and billions of dollars as a result of Interchange fees.

- While the card holding associations assert that the fees are justified, merchants are clamoring for congress to demand greater transparency regarding the costs incurred by issuing institutions from processing transactions.  Similar to insurance companies, the profits realized by Visa and MasterCard are astronomical and someone is paying for it.   

- The costs are not fully disclosed – In the past seven years, I’ve spoken with countless merchants who were dissatisfied with their present providers because of their deliberate attempt to either obfuscate fees or neglect providing full disclosure.  Merchant account companies (all types of companies) need to embrace a consumer perspective and understand how upsetting and frustrating it is to discover that one’s rates are much higher than anticipated.

I’m starting to see more and more information and petition sites, clamoring for retail (and Internet) processing costs to go down.  Many assert that the card holding associations are engaging in price fixing and that merchants and consumers alike are paying an unfair, inordinate amount.  The “lower swipe credit card fees” camp asserts that the money saved on processing would be pumped back into the economy, increasing consumer spending and confidence.

So merchants, the next time you swipe a credit card, realize how important it is to secure an affordable merchant account -- particularly important as rates go up and not down.