The national trend of merchants passing on their credit card fees continues to accelerate, aided last week by a federal court striking down Texas’s “no-surcharge” law as unconstitutional.
The Texas ruling follows the defeat of no-surcharge laws in Florida and California, but it is a unique milestone: Texas is the first state in which a surcharge ban that was previously upheld has now been struck down under last year’s Supreme Court precedent in Expressions Hair Design.
Now businesses in all states can benefit from including the merchant service fees on transactions. What can you do with an additional four or five percent on your bottom line?
NM-POS can set up all of our products to collect electronic funding fees automatically. Unfortunately First Data Corp.’s Clover Unit removed this ability from their App putting their merchants in the hole regarding this ruling.
A recent analysis by industry experts confirms, “When cardholders bear the cost of their own rewards, they are motivated to choose a lower-cost option.”
VIVA la Merchants and Free Speech!
November 21, 2018
Credit Card Interchange Fees & What They Mean
When it comes to Credit Card Processing fees, it’s important for a merchant to look closely at every aspect of a quote before choosing the right processor. Though some fees are set in stone, others can be negotiated or discounted. While even a minuscule amount doesn’t seem like much, most merchants tend to stick with a processor for several years and savings add up to a substantial amount saved. Before joining with CoCard, New Mexico POS was free from any ties with Credit Card Processing companies and learned the best ways for their customers to save a significant amount of money. In the coming blogs, we will highlight and define certain aspects you as a merchant should consider before signing up with a new processor or maintaining your relationship with your current processor.
Interchange fees are included in every statement, quote, and general statement provided to the merchant. They make up the majority out of all the fees and are often presented as a percentage plus an additional fixed amount. This fee is based on multiple different factors such as:
- MCC (Merchant Category Code) – The way your business is categorized and each transaction processed will effect the interchange and what fees apply to you per transaction. For example, an electron ic retailer with high $ amount transactions but fewer may pay more per transaction than a quick service with lower $ transaction amount but with greater transaction count.
- Card Type – Ever notice you get a great discount or reap loyalty rewards if you use a store brand credit card? Or if you pay for gas with a credit card instead of a debt, you receive a $ discount per gallon? This is because fees are based off of the card type. Typically, running a credit transaction is far less than running a debt.
- Payment Processing – Processors can monitor how transactions are settled and this can skyrocket the rates or keep them at the lowest possible point. This is dependent on whether the transaction is ran through an EMV chip reader, MAG card swipe, manually input into the terminal, and more.
- Network – Visa, MC, Discover, and AMEX all have their own networks and charge different interchange rates to utilize them.
Though these are not the only fees attached to processing credit cards, these are some of the mandatory charges in which the processor usually has no control over. To lower this rate for the best possible price, make sure your business is processing with the most secure option, running cards as a credit transaction, and keeping your payment processing network secure.
Any questions? Contact New Mexico POS at 505-293-7551 and we will more than happy to help!