Most processors use the term "Enhanced Billing" when they charge a low “Discount Rate” then surcharge (over-inflate) the actual interchange rate. If a merchant doesn't have a working knowledge of the 1,000+ Interchange categories, this is impossible to detect (e.g. Data Rate II is 2.05% and not 2.95%).
This is a real example where the Visa EIRF Interchange was actually 0.76%. But when you divide $31,528.06 by $444.55, it comes out to 1.41%. Here, the processor is charging an additional 0.65% on top of Visa’s 0.76% Interchange rate. Meanwhile, the merchant thinks Visa is charging them 1.41%.
Worse still, the processor is rewarded for the merchant’s mistakes. Processors make additional profit off of the merchant’s downgrades; therefore, the worse the merchant’s transactions clear, the more profit for the processor, the very people teaching them how to process.
In this case, the processor was charging a Discount Rate of 0.30%, which is very high! However, when you factor back in the hidden surcharge of 0.65%, the true Discount Rate is 0.95%.
Impossible to detect
Requires an audit to uncover
Uncovered on about 30% of audits
Found mostly on medium to large merchants