Private label credit cards are designed mainly for repairs, maintenance, and fueling of business vehicles.

The footer is the text printed at the bottom of a sales draft. A merchant can customize the footer (e.g., “Have a Nice Day,” “No Refunds,” “Thank You for Shopping With Us,” etc.).

Many of the hidden credit card processing fees are difficult to detect without detailed analysis, which often overwhelms most merchants. However, this particular hidden fee is easier to highlight. It involves a bit of math, but nothing too complex.”

Divide the “Processing Fees” charged to the merchant $1,559.41 by the “Amount of Net Sales” $326,194.08 and you get .48%. However, when you look at the “Discount Rate,” it shows .35% not 48%.

The credit card processor shows the 35% (which is already six times more than any merchant should ever pay for a discount rate) and hides the extra 13%. This one is not only hidden, it’s deceptive.

A bank that is a member of Visa or MasterCard, etc., that gives banks access to their processing networks. Only banks may join; therefore, processors must have an MSP in order to gain access to the processing networks. 

In order to be competitive and offer lower discount rates, credit card processors can get creative and charge fees that are unique to them. This gives the merchant a false perception of what they are truly paying.

Below, the credit card processor added a fee called “Network & Processor Access Fee” for .07%. This is not to be confused with the actual fee named “Network Access Fee” charged by the processing networks and is a dollar amount, not a percentage.

In order to be competitive and offer lower discount rates, credit card processors can get creative and charge fees that are unique to them. This gives the merchant a false perception of what they are truly paying.

Below, the credit card processor is charging the merchant .48% for a “Risk Fee.” This fee is imposed by the credit card processor, not the processing networks. It is not charged to all of their merchant agreements; only some merchants have to pay this fee. We have only found this fee being charged by one credit card processor. To put this in perspective, this added fee is almost ten times what a merchant should be paying the processor, and this does not include the “Discount Rate.”

In order to be competitive and offer lower discount rates, credit card processors can get creative and charge fees that are unique to them. This gives the merchant a false perception of what they are truly paying.

Below, the credit card processor is charging the merchant .15% for a “Settlement Funding Fee.” This fee is imposed by the credit card processor, not the processing networks. It is not charged to all of their merchant agreements; only some merchants have to pay this fee. This little added fee is three times what the merchant should be paying their processor, and that’s before the discount rate gets added in.

A website shopping cart is software that allows customers to select and purchase products online. It mimics the experience of shopping in a physical store, where customers can browse, add items to a cart, and then check out. If a merchant sells to businesses, it must have a shopping cart that will connect to a data-enhanced payment gateway. If not, then the merchant will pay anywhere from .70 to 1% in interchange fees. A shopping cart will collect the minimum data needed to process a credit card transaction. However, business, corporate, and purchasing cards require much more data in order to get lower interchange fees. A traditional payment gateway will only pass the data it receives, allowing the transaction to downgrade to a higher credit card interchange rate. A data-enhanced gateway will fill in the missing data to ensure the merchant pays the lowest available credit card interchange rate. Credit card processors will often tell merchants that their gateway will auto-populate that missing data. Be sure to get that in writing on official letterhead and signed by an authorized officer, so you don’t end up learning the hard way and having to pay to fix it later.

The fee charged to the merchant is passed back to the issuing bank. The fees fluctuate based on industry, card type, processing network, method of entry, and data passed. The interchange fees are updated every April and October. It is best to use a Data Enhanced Payment Gateway that will fill in missing data or correct the data to ensure the transactions settle at the lowest interchange fees. This can reduce interchange fees as much as .70 – 1%.

Caution—Processors have been caught inflating/padding the interchange. For example, Visa charges 2.2%, and the credit card processor charges the merchant 2.95%, creating an extra .75% profit for the credit card processor.

A credit card surcharge occurs when a merchant passes their processing fees onto the customer. This can be done in a couple of ways:

A) The credit card processor can charge all the merchant’s customers a flat 3% fee. However, the processor will also raise the merchant’s debit fees, which cannot be passed back to the consumer. A bigger concern is that the credit card processor is fully indemnified, meaning the merchant is 100% responsible for any fines or penalties from the card networks. Even worse, the merchant risks losing the ability to accept credit cards and could face legal consequences in states where surcharging is prohibited or strictly regulated. It’s not a simple “one size fits all” solution; it’s a complex process. Review your merchant agreement carefully—you’ll find an indemnity clause stating that the processor cannot be held accountable, leaving the merchant with all the risk.

B) Partnering with a third-party expert can offer advantages:

However, even with this option, ensure you are not liable for any legal or regulatory violations, and that the third party assumes 100% of the liability.

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