Top 3 Reasons Why You Are Paying Too Much For Credit Card Processing

December 10, 2021 by William Stapleton

Accepting credit card is a necessary component of running and growing a business, however it can also be quite frustrating and confusing. The credit card processing Industry is like the wild wild west. For the most part, it’s unregulated,  meaning processors can charge businesses whatever they want on top of interchange and the dues and assessments. Choosing the wrong processor could cost thousands each year in hidden fees, so its important to know when you are being overcharged.

Tiered or Bundled Pricing

Tiered pricing is the most commonly used pricing in the industry, but  it lumps businesses into qualified, mid-qualified, and non-qualified buckets, causing them to pay the highest interchange rate for all the cards in that bucket.

Flat Rate Pricing

Processors like Square and Paypal are great for certain businesses, but for small to medium-sized merchants on Flat Rate pricing, they end up paying premium rates for each transaction. Flat rate processors will often charge something like 2.9% and 30 cents per transaction to cover interchange, assessments, and the markup that goes to the processor. The problem is, some cards are far less expensive than others so the processor will make a much higher profit on these transactions.

Hidden Fees

Most credit card processors will take advantage of merchants by slapping on unnecessary hidden fees on top of the non-negotiable assessments.  Fees such as “Interchange Clearing” and “EIRF” on your merchant statements are common fees that processors will add on and mean you are paying too much for your processing.

There are many different ways for processors to take advantage of merchants, but with a little bit of education businesses can easily identify the most common ones. These telltale signs are a good indication deceptive practices and can many time open up to other hidden miscues, therefore it is very important to know what to look for.