In the world of credit card processing, transparency is king. In fact, transparency has its own language… ok, maybe not language, but there are keywords, that every business owner should pay attention to, such as yes, no, never, and always. Any business (worth its weight in salt) should be able to deliver on these transparent promises. Sales can quickly take a turn for the worse when vagueness is part of the equation.
The word “transparency” is often used in reference to credit card processing, which is something that all merchants should be aware of, aka: how and what processing fee information is provided? For example, “We provide you with full transparency” is a phrase that tells consumers that they will have full access to the good, the bad, and even the ugly. If you offer interchange pass-through pricing, plus a markup, the fee should always be fully disclosed.
Sometimes a company will tack on “pass-through fees,” which comes with a fee name that is different from the card associations. Other times it is blatant and in your face. Either way, according to the “keyword guide,” it’s not actually transparent.
This is often lost in translation between processing companies and merchants. Processing statements are complex, which can lead to unknown pass-through fees. Independent sales agents are most commonly known for taking advantage of this. It is always wise to know if a card processing company contains pad fees and rule of thumb is: always educate yourself on the details of where they are typically padded.
This brings us back to the honesty bit of the transparency equation; padding fees are an unfortunate and unethical practice among some (not all… and most importantly, not us) credit card processing companies.
In order to explain this we must take a quick look at interchange; IC is the wholesale cost to run a transaction. Each credit card brand determines the cost, which is passed on to the consumer. This is not good for any business that is trying to bring in and keep customers, which is the goal for any business, right?
For example, a swiped or chipped card will have an effect on the IC cost, same goes for reward cards. Padded IC means your provider is marking up hidden fees in order to make an extra buck.
The only way to avoid this is to ask your provider questions. You have to play Santa Claus in this area, make a list (of questions), check it twice, and you’ll most certainly find out who’s naughty or nice. You also have to be diligent about checking your statements carefully. Hidden fees can show up in very minimal percentages, so for you that can easily be overlooked, but for the non-transparent provider… adding that fee to each of their accounts can add up quickly and become a nice (and shady) addition to their bank account.
Merchant services are based on trust, only with transparency can you achieve that trust, and create long-term business relationships. What you see… should always be what you get in the processing world.