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 17 - Contractual Fees Simplified
Creative. Use unconventional thinking. And have the guts to carry it out
- Lee Iaccoca
The associations enforce interchange, FANF, dues and
assessments and PCI surcharges. None of this income makes its way into
the hands of the sales agent, or the processor.
Then how can you, the sales person, earn an income beyond the
sales bonuses provided by the processor and the over ride on equipment
In our industry, you earn a living, and many times a VERY good
living, via incremental amounts - by fractions of a percent and pennies
a transaction, as well as a few other methods.
And did I mention residual opportunities?
Contractual fees are the host of fees enacted by the processor
as a means to generate additional income on top of that generated by
adding fees on top of interchange.
Many of these fees can be reduced or even eliminated by the
agent. Doing so will generally impact the income received by the agent.
We encourage the agent to make a thorough review of these fees, as well
as the capability for the agent to waive/alter the fees in question. We
will discuss pricing in another chapter:
– If a merchant cancels their....