Credit cards used by businesses for travel and entertainment expenses.

Submission of an electronic credit card transaction for financial settlement. Authorized credit card sales must be captured and settled for a merchant to receive funds for those sales. 

The bank that issued the credit card and collects the interchange fees. 

The person who owns the credit card to purchase goods and services.

Credit card companies make it difficult for credit card transactions to settle at the lowest interchange fees by imposing stringent rules. However, they do offer a solution: credit card processors can fix the transaction—but they’ll keep 75% of the savings for themselves.

Let’s break down the math to clarify this. Suppose a merchant processes a $500 transaction that would have downgraded due to missing data. The processor inserts the missing information before submitting it to the card networks, allowing the transaction to settle at a lower interchange rate, typically saving around 85 basis points. This means the merchant saves $4.25. However, the processor takes $3.19 of that and leaves the merchant with just $1.06, claiming that without their intervention, the merchant would have lost the full $4.25.

Alternatively, third-party services can also correct the transaction for a fee of just 5 basis points. Let’s run the numbers: 0.05% of $500 is only $0.25. The third party would save the merchant the same $4.25 but take only $0.25, allowing the merchant to keep $4.00.

So, here are your options:

The choice is clear. The only complication arises when your ERP or POS system blocks third-party solutions to boost their own profits, leaving you without help.

Click here to schedule a call to learn how easy it is to fix this. 

A credit card transaction that is billed back to the merchant after the sale has been settled. The card issuer initiates chargebacks on behalf of the cardholder. Typical cardholder disputes involve product or service dissatisfaction or delivery failure. Cardholders are urged to try to work it out with the merchant before disputing the bill with the credit card issuer. Also, this can come from fraudulent card use where the cardholder’s data was stolen. 

The process of sending the batch for settlement.

Issued to businesses to cover expenses such as travel and entertainment, procurement, etc. The most common type of commercial cards are purchasing cards, business cards, and corporate cards. Visa and MasterCard require more data to be passed and charge a much higher fee for these cards if only basic data is passed. Businesses that receive commercial cards should make sure they have optimized interchange. For large companies, this can cost them millions a year in unnecessary higher interchange fees. 

Corporate cards are typically issued for midsize and larger companies with complex needs, while business cards are designed for small businesses.

A reversal is a cancellation of a sale that has not been settled. It immediately “undoes” an authorization and returns it to the open-to-buy balance on a cardholder’s account. Not all issuers support reversals.

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