Examining the murky waters of credit card swipe fees

Credit card swipe fees can be very costly for small businesses.

This blog has been covering the ongoing issues, both legal and regulatory, surrounding credit and debit card fees and rules for some time. Recently, NACS featured a guest column from Jeff Miller, the president of Miller Oil Co. and the NACS chairman from 2010 through 2011. He wrote about how swipe fees are really hurting businesses.

Card fees (or swipe fees in retail environments) represent the cost that businesses pay in order to accept cards and process these payments from approval code through settlement of funds to their business bank accounts.  While these fees vary depending on the provider, most of the underlying costs are largely regulated either by the Fed or by the card companies themselves, who publish Interchange in the public domain and are set the same for all banks that participate in providing merchant services.

Sometimes it's not all about the fees themselves but how you are managing the fees you are paying. And under these regulated conditions this is particularly true. Paying with a card has become second nature for consumers, and cutting this service from your business isn't going to help you become more competitive.  The station across the street is accepting card payments and paying card fees too. This is why merchants need to be smart about selecting merchant service providers and the payment solutions they deploy. Tools like myrealrate.com can help businesses benchmark their processing costs against similarly sized companies in the same industry to gain a better understanding of what a competitive price would be and to learn how to lower their bottom line card processing expenses. 

Any organization looking into credit card processing services should read these eight steps to lower processing cost. Understanding how to better manage swipe fees can have a big impact on both the bottom line profits and competitiveness.

by Ty Hardison

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