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Are credit card processing fees too high?






To operate a retail business of any kind requires a business to accept credit cards – Visa, MasterCard, American Express and Discover. But what is one of the biggest complaints that retail merchants of all types have? The fees that they pay to their credit card processor are excessive. Not only that, but almost no merchant can really understand what they are being charged for. There are so many different rates and charges that it’s virtually impossible to understand a monthly merchant statement. Owners of companies that accept credit cards really don’t know how to evaluate their merchant processor or how make sure that they are treated fairly.

Adding to the uncertainty of merchants is the continual contact from merchant processing companies with solicitations for their services, proclaiming that they can lower the fees paid. Can they really lower the fees? Some can and some can’t. And the salesperson contacting you doesn’t know, either.

So what are the fees charged? The base level fee charged is the bank interchange rate. Virtually everyone thinks that these are the fees that Visa and MasterCard charge. However, that is not correct. These fees are set by Visa and MasterCard but are collected by the banks that issue the cards and run from .95% to 2.95% plus $.10 to $.20 per transaction, depending upon the type of card and the profile of the merchant. Visa and MasterCard receive a small association fee of .13 percent. Merchants pay the fees to have the ability to accept credit cards and receive payments from their customers. Interchange fees are largely unregulated despite the obvious level of price fixing involved and a history of anti-trust litigation. In addition to this, there is a middleman -- the merchant processor -- that charges its fees. In some cases, they just pass through the bank fees and add a markup. In other cases, they offer tiered pricing and charge fees based on the types of cards in groupings of similar cards. Generally, tiered pricing is more expensive to the merchant.

The Credit Card Act of 2009 protects consumers, but not merchants, from unfair interchange practices of banks and processors. So what can a merchant do? There are two solutions available. You can join with the Merchants Against Unfair Interchange (MAUI), an organization founded with the mission to help provide merchants with fair pricing and fair treatment. In addition to petitioning Congress for action, MAUI has retained a company that will identify and eliminate the “hidden costs” and monitor ongoing fees to ensure that the unfair charges do no recur. The other choice is to keep switching processors to try to find one that treats you fairly. Which one do you think will result in the lower costs?

When you enroll in the MAUI program, you are protected from excessive fees from your merchant provider. A merchant can have their interchange rates reduced and save money every month. Currently, more than 2,600 companies have joined up and saved more than $6 million. Monthly savings range from 5-25 percent or sometimes more.

There is no initial charge to have an analysis done to see what your savings can be. You will only be asked to share the savings with the company. So why not find out how much your company can save.

For more information, please contact me.



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About the Author

Tony Peterson, TYZ Financial
West Palm Beach, FL 33409
561-891-0915

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