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If Credit Card Processing …

If Credit Card Processing Networks Controlled ACH Fees

If credit card processing networks controlled ACH Fees, then ACH fees would look very different than they do today.

When addressing the Senate back in 2011, Senator Dick Durbin said, “Credit Card Interchange is a price fixing scheme.”

Finally someone, besides me, that sees this for what it is.

If credit card processing networks controlled ACH Fees, it would look something like this:

Was color was the check?
What day of the week was the check written?
Was it from a business or personal check?
Was it a single signature or dual signature check?
Did it have cats or dogs printed on the check?

I could go on and on, but I think you get the idea.

There are things most merchants don’t realize about credit card interchange. Like when a retail merchant has to key a transaction and puts in the wrong billing zip code, Visa hits that merchant with a substantially higher interchange fee. Why? Because this transaction is considered a higher risk. This makes sense, except for one major thing… WHO is at higher risk? It’s the merchant will not get paid if the transaction turns out to be fraudulent in addition to being out the cost of the product or service they provided.

Let’s make this simpler to comprehend… Imagine your child just turned 16 and started driving. The insurance company tells you that your rates are going way up. Of course that makes sense now that you have a high risk driver. Imagine if they end up getting into an accident and the insurance company tells you, “sorry, but your child is not covered” even though your rates soared to offset the risk. In no other industry would this be acceptable.

Or, how about paying much higher interchange fees because a transaction is tax exempt? Why would you have to pay way higher interchange fees just because the buyer had a tax exempt status?

Again, I could go on and on, but I hope you get the idea. They make up crazy rules in order to force merchants’ transactions to downgrade so they can charge them a higher interchange fee.

In order to keep merchants guessing, they are constantly adding and removing fees, as well as adding hundreds of new interchange fees since as far back as 1991. At that time there were a total of only eight interchange categories, and it grew to just over three hundred by 2009. Today in 2024 there are approximately one thousand! Why are there so many interchange categories?? Well, because they can!

One of our greatest expenses is updating our software just to keep up. Every April and October they change the rates; however, unlike what the media says, (see below) the rates hardly ever move.

In the chart above you will see in 2009 the highest rates ranged between 2.95% – 3.25%. As of today (September 2024) fifteen years later, the highest tiers range between 3.15% and 3.30%. That’s about 0.01 per year. Nothing else has had that small of an increase that I know of, and as we all know, most things have skyrocketed over the last few years.

So why would they say credit card fees keep going up?

Read some of the other insights like:

The common theme is credit card processors add in made-up fees, inflated fees etc.

Here is the good news! We help merchants with Interchange Optimization™ – getting merchants transactions to settle at the lowest interchange rates, reducing the average merchant’s interchange fees as much as 30-40%.

Credit card processors do everything they can to make things hard and make merchants pay higher fees. We do everything we can to help merchants get their credit card fees reduced, and for pennies on the dollar. Make sure you check out our fees at the bottom of our home page.

Then you will see why Kevin Harrington from Shark Tank says we truly are a NO-BRAINER!

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