there fees beyond Interchange? When I first entered the bank card space
I was asked a million times ‘What’s your rate?’. Today the same
questions are asked by a merchant base generally in the dark as to how
fees are assessed, not educated on ALL the fees from equipment to early
cancellation fees. Which brings us back to both interchange - the core
fees which constitute the majority of the fee assessed to the merchant,
and all the ancillary fees charged against the merchant.
Merchants must pay fees to the issuing and acquiring banks, as
well as the card associations. Processing fees are discussed, including
who gets what fee. We review interchange in this context as well.
Consumers require some means to conduct a purchase. Whether
face to face in a store, online purchases, or mobile transactions we
review the expenses which are tied to each solution. We also discuss
the merits and downfalls of each purchase method - cash, lease, and
The processor (third party, ISO, or MSP) plus the agent
receive their compensation within the fees assessed as part of the
merchant agreement. There are many fees which, collectively,
constitute a significant earnings opportunity for processor and agent
alike. We will discuss many of the fees to set the stage for our
pricing discussion in a future chapter.
iProcess - Knowing the Payment Industry (Part 1)
Chapter 15 - Processing Fees Simplified
Creative. Use unconventional thinking. And have the guts to carry it out
- Lee Iaccoca
Merchant Fees ‘De-Mystified’
Payment processing is not an inscrutable event. Consumers make
purchases, and merchants desire money. As many purchases are made with
a credit card, the merchant understands that at the end of the day they
must pay a ‘fee’ or ‘service charge’ to convert the electronic data
captured at their store into money in their bank.
iProcess demands you are comfortable with merchant fees.
Although the sale occurs between consumer and merchant, the
‘intermediaries’ who handle the money transfers when credit cards are
used are critical in providing a reliable, convenient, and secure event.
Issuing and Acquiring banks will make money on each sale via
interchange fees. The sales channels – third party processors, ISO and
MSP organizations sell the services to the merchant, with agents act as
the sales conduit between merchant and processor.
Everyone who provides a service wants to be paid. Interchange
fees are but a portion of the expense associated with credit card
processing and yes, although they can be confusing, ...