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:

• Are Credit Card Processors Inflating Your Interchange Fees?
• The Great American Heist – How Credit Card Processors Steal Businesses’ Profits
• How Can I Have The Lowest Discount Rate and The Worst Deal?
• Do You Have Risk Fees On Your Credit Card Processing Statement?

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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This article was written for the Forbes Business Council and will only be available on Forbes.com until September 6th, 2024, when the exclusivity rights expire.

Please click here to read the article on Forbes.com  

Some credit card processors employ a deceptive tactic known as “enhanced billing.” This involves initially charging a low discount rate and then inflating the actual interchange rate (which is the fee charged for processing a credit card transaction). For a merchant without a comprehensive understanding of all the various interchange categories, this practice can go undetected.

It’s a common scenario where merchants are unaware of the sheer number of interchange categories, let alone the actual rates and their application. If a merchant is not aware that the rate should be 1.90%, it becomes easy for the processor to impose a higher rate, such as 2.5%.

How It Works

Processors don’t usually mark up the base interchange rate (the rate charged for basic non-rewards, non-commercial card transactions) since this rate is listed on the merchant’s agreement, and they may notice that rate bump.

They only mark up the transactions that downgrade. For those who may not be as familiar with credit card processing jargon, a downgrade is when a transaction does not settle at the lowest tier/rate; for example, a transaction that could settle at 1.90% would downgrade to 2.95% if not enough data was entered at the time of the sale. This usually takes place when the merchant has the wrong equipment, payment gateway, setup, etc.

This means the processor’s profits go up when transactions downgrade. In short, the processor is incentivized for a merchant to get things wrong. Yet, most merchants turn to their processors for help.

A smart processor may help the merchant fix some of the downgrades while leaving the majority of the transactions to downgrade. The worse a transaction clears, the more profit for the processor, the very people teaching merchants how to process. This means that if the processor sets the merchant up wrong, the transactions will downgrade, costing the merchant more money and making the credit card processor more money.

In 2016, a class-action lawsuit was filed against Vantiv Integrated Payments over “claims the company charged customers unauthorized and marked-up fees.”

The Lack Of Regulation

One thing that merchants must realize is that while merchant processing is a banking product, it is not regulated like other banking products. Banks can’t just extend the term of a loan or change the rates. However, in merchant processing, they can raise rates, inflate fees, make up new rates, etc.

At my company, we often find fees on one merchant’s statements that are not on another merchant’s statements, even though they both use the same processor. Not only are the rates different, but they also have different types of fees. We can audit 100 merchants in the B2B distributor space, all processing around $10 million a month, and none of them pay the same fees. Some may be paying $50,000 or more a year than others. Yet, about the only difference between them is their name.

Like many businesses, you would expect the prices/fees to fluctuate. But as much as 40%? Imagine if you bought a new car for $40,000, and you find out that your neighbor bought the same exact car the same day at the same dealership and only paid $24,000. But to get a real grasp of how much this impacts businesses, now pretend you had to buy that car every month and have that $16,000 a month analyzed.

It is not as easy as keeping track of a single purchase; they may have anywhere from a few dozen to over a hundred line items that need to be validated, and the validation is no easy task. Is it a real fee? Does it match the processing networks beyond complex interchange charts? And the list goes on from there.

Some credit card processors would say this is simply the free market. You can charge anything you want for anyone you want. That is true, but company leaders have to decide if they want to go back to that processor or look for one that plays more fairly and treats customers more equally.

What Companies Can Do

If you are interested in hiring a specialized auditing firm for credit card processing fees, look for a firm that guarantees its work, doesn’t require a contract and does not take a percentage of the savings. (Disclosure: My company helps with this, as do others.)

Keeping a close eye on your statements in May and November is crucial due to the adjustments in interchange fees by Visa and Mastercard every April and October. Despite these adjustments being minimal—usually less than 0.01%—processors often use them as an excuse to hike their own fees, attributing the increases to the processing networks.

When you notice an increase, don’t accept vague explanations from your processor. Demand detailed breakdowns of how these changes impacted your fees. It’s essential to scrutinize each fee listed on your statement. For example, you can Google terms like “risk fees” to verify their legitimacy and ensure they aren’t fabricated by your processor.

If they are legitimate fees, you should be able to find the fees on the processing network’s websites, not a blog or a processor website. But even that can be tricky, as “risk fee” is a real fee, but it is very, very small—as in, less than one cent in most cases. However, processors can make up a fee with the same name and charge a very large amount. That is their fee, but it is not the same fee that is shown on the processing network’s page.

By staying vigilant and informed, you can protect your business from unnecessary charges and avoid overpaying due to unjustified fee hikes.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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Credit card companies make it difficult for credit card transactions to settle at the lowest interchange fees by adding stringent rules. However, they came up with a solution to fix this for you called I/C (Interchange Clearing) Fee, or another processor calls it CCIS (Commercial Card Interchange Service). It is when the credit card processors fix the transaction for 75% of the savings.

See below for what it looks like on your statement.

Before you think this is a good deal, let’s do the math and shine the light on this a little more…

If a merchant runs a $500 transaction that was going to downgrade from missing data, they will insert the missing data before sending it off to the processing networks. By doing this, the transaction will settle at a lower interchange fee – on average, about 85 basis points less, saving the merchant $4.25. The processor will take $3.19 and give the merchant $1.06 and say the merchant should be happy. After all, if not for them, they would have lost $4.25.

However, third-party companies will also do this and their fee is only 5 basis points. So, let’s do the math on that:  .05% of $500 is only $0.25, so the third party will save you the same $4.25 and they will take $0.25 and give you the $4.00.

Option A – Use your processor who is creating the problem to fix the problem and you keep $1.06.

Option B – Use a third party that helps fix your interchange and you keep $4.00.

I think it is an easy decision. The only exception is when your ERP or POS blocks third parties to increase profits and prevent you from getting help.

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

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Credit card companies make it difficult for credit card transactions to settle at the lowest interchange fees by adding stringent rules. However, they came up with a solution to fix this for you called CCIS (Commercial Card Interchange Service), or another processor calls it I/C (Interchange Clearing) Fee. It is when the credit card processors fix the transaction for 75% of the savings.

Before you think this is a good deal, let’s do the math and shine the light on this a little more…

If a merchant runs a $500 transaction that was going to downgrade from missing data, they will insert the missing data before sending it off to the processing networks. By doing this, the transaction will settle at a lower interchange fee – on average, about 85 basis points less, saving the merchant $4.25. The processor will take $3.19 and give the merchant $1.06 and say the merchant should be happy. After all, if not for them, they would have lost $4.25.

However, third-party companies will also do this and their fee is only 5 basis points. So, let’s do the math on that:  .05% of $500 is only $0.25, so the third party will save you the same $4.25 and they will take $0.25 and give you the $4.00.

Option A – Use your processor who is creating the problem to fix the problem and you keep $1.06.

Option B – Use a third party that helps fix your interchange and you keep $4.00.

I think it is an easy decision. The only exception is when your ERP or POS blocks third parties to increase profits and prevent you from getting help.

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

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Every day, our clients ask us about the Payment Card Interchange Fee Settlement, which has been going on for years and has many extensions. The latest one is now February 4th, 2025. If you would like to read more about it. Here is the official link. 

Our clients repeatedly ask us because every day, a company will call them up saying they help businesses by filing a claim on their behalf, and they work on a success-based basis. First, the case has a $5.5 billion dollar cap, which means, most likely, there won’t be anything left after the biggest merchants take their cut.

Secondly, if you want to file a claim for the Payment Card Interchange Fee Settlement just click here. It is FREE and only takes a few minutes. So now you don’t need to give 50% of whatever money you may receive. 

The reason this class action lawsuit was brought in the first place is because of the lack of government regulation, which allows credit card processors to overbill merchants, inflate fees, insert junk fees, inflate interchange fees, and so on. However, to be clear, this case does not change any of that, nor does it make the processors play fair going forward. Instead, just the opposite will most likely be the case. I think anytime someone gets caught cheating and has to give money back, they are more likely to find a new way to get it back. 

We have seen more of an uptick in deceptive billing practices over the last few years than ever before. Once they actually pay out $5.5 billion, watch their stock and see if it hits rock bottom, or will it be like nothing even happened? Again, I think the latter, which means they made all the money right back. 

If you are here, you are hoping to get money back from the credit card processors on this class action lawsuit and while that most likely won’t happen, you can take advantage of our Free Audit and find out how much your credit card processor is overbilling you and find out how much you may be able to recover from previous overbillings directly from your processor. 

If you are not ready to get your free audit, no problem; take a look around our site. The more you learn about us, the more you will soon find out why we are America’s #1 Credit Card Processing Auditing Firm. 

Or click here to check out what Kevin Harrington from the NBC hit TV show Shark Tank had to say about us.

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If you want a fee reduced or even removed, you can call your credit card processor and just ask. Most of the time they are willing to comply. Why not?… after all, it makes you happy because you just checked off a box on your to do list and made you feel like a winner! You probably thought, “How hard was that?”

Falling right into their playbook, you are on to your next task and this one is now in your rearview mirror. Most likely, this was your first rodeo while it was their ten thousandth. They do this all day, every day and have for years. There’s a reason their company makes billions every year, and it is not because they just roll over.

So, let’s assume you just found a new bogus fee like an “Interchange Clearing Fee” that was costing you .15% like the one below…

Again, they say to you, “No problem,” and remove it to appease you.

Fast forward a few months and now you have a “Settlement Funding Fee” like the one below…

It is also costing you .15% – only this one has been on your statements for a couple of months. Now, they may try to appease you again, and try again next month. Or they may say, “Sorry, this is a fee we cannot remove.” Or worse, they will point you back to your merchant agreement and say, “Read page one.” (Which states they can increase your fees and add NEW FEES for any reason.)

Sadly, it gets worse!…

They will also point to a clause like the one below that says by continuing to use your merchant account after 30 days, you are agreeing to the new or increased fees, so by agreeing to these new fees, they now become part of your agreement going forward.

In short, you have 30 days to catch the new or increased fees and file a dispute to get any monies back, and more importantly, to make sure they are not part of your agreement moving forward.

Enough of the bad news; here’s the good news! – weAudit stops credit card processors dead in their tracks. This is why monthly monitoring is so critical. We catch the overbillings and get the money returned and ensure that you do not get stuck with any bad deals moving forward. And our fees are a small fraction of what we get you back.

As Kevin Harrington from Shark Tank said, “This truly is a no-brainer!”

He also said, “weAudit is the only company that EVERY company needs.”     

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Understanding credit card processing terminology is crucial for merchants who want to make sense of correspondence and memos from their credit card processor. We’ve also highlighted a few common “made-up” terms, such as “Risk Fees” and “Interchange Clearing Fees.” If you come across a fee on your merchant processing statement that isn’t listed here, don’t assume it’s legitimate. Our goal isn’t to catalog every made-up fee, but to provide examples so you, as a merchant, are aware that such fees exist.

Click here to go to Definitions.

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Best Credit Card Processors – SCAM

No one has put together a definitive list of the best processors. Who could do that even if they wanted to? Fiserv (formerly First Data) and WorldPay are the two largest processors globally, yet they never appear on these lists. Instead, what you’ll find on the lists of “Best Credit Card Processors” are names you’ve likely never heard of.

In fact, the companies on these lists are often not credit card processors at all. They are what’s known as ISOs (Independent Sales Organizations). These are companies that resell merchant processing services. I don’t have an issue with ISOs; more often than not, unless you are a very large merchant, you will find better pricing with an ISO compared to an actual processor.

The real issue is that many of these ISOs, especially the smaller ones that engage in some of the worst deceptive billing practices, pay to be listed as the “Best Credit Card Processor.”

A few things to consider:

1. They are not being truthful about being a credit card processors, let alone the BEST. If anything, they should be on a list of the “Best Credit Card ISOs”—that is, if they were actually the best, which I doubt. So, if they would lie about being the best credit card processor, would they also use deceptive billing tactics?

2. These websites charge a lot of money to put these lists together. If you follow the logic, it would be very difficult to pay a lot of money to be on a list and still offer the lowest fees to customers.

3. Credit card processing is extremely complex. It takes years to even come close to fully understanding it. Much like sports, you might have the basics down, but are you an expert on every rule? Are the people who compile the “Best Credit Card Processor” lists experts in merchant processing? Oh, and by the way, they also create other “Best of” lists—so are they experts in all of these topics too? I’ve been in this industry for over 25 years and worked as an executive for over a decade at one of the world’s largest processors, and even I couldn’t put together a definitive list because I’ve seen both amazing deals and horrific deals from the same processor.

If you want to know if the company is an ISO, you need to look at the footer of their website. If they are an ISO they have to disclose it there. However, if it is a name you’ve never heard of, and you don’t see the ISO disclosure, then they are probably an agent for an ISO. If you want to know for sure, you can simply ask us and we will let you know.

An example of an ISO disclosure:

Another type of website you have to be cautious of are the “free” blogs claiming to help you get the best credit card processing deal—for free!

We all remember what Mom taught us: there’s no such thing as a free lunch. How is that website making its money? No business puts in endless hours and pays for hosting, etc., just as a gift to the world. No, they get kickbacks, which is now called “revenue share.” So, the credit card processor jacks up your rate and then gives part of those higher fees to the blog or website that referred you to them. Again, the entire relationship is built on deception.

The question is… can you expect transparent billing and the lowest rates from someone who deceived you just to get your business?

Now, to be fair, we do offer a free initial audit—but our concept is like the big box grocer who gives away a free cookie in hopes you’ll buy the bag. The initial sample is free, but if you want the entire bag, it will cost you. Also, like the big box stores, we too have amazing money-back guarantees if you don’t love the results.

Unlike the other guys, we are not partners with credit card processors and they do not pay us anything! We audit credit card processors. Unlike others who claim to represent you while actually representing the processors, we only represent YOU—the merchant.

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SAY NO to PassKey Encryption

**Urgent Notice: CRITICAL UPDATE**

Please Read – Very Important Information!

Starting August 26th, 2024, Fiserv will urge merchants to implement PassKey encryption, in order to access their merchant processing statements claiming it enhances security. However, before you opt-in, be aware that this encryption will lock everyone except you out of your account. 

(Fiserv aka ClientLine is where you pull your merchant processing statements.)

PassKey encryption is designed for highly classified financial documents owned by a single individual and is not intended for business accounts.

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If that employee leaves the company, is terminated, or is unavailable, you could be completely locked out of your account.

Is this really about making your processing systems more secure? No. Even if others had access to your account, all they could see is how much you processed and how your transactions settled. They cannot take, move, or manipulate your money in any way.

The real intent behind this move is to block third parties like us from accessing and, more importantly, auditing your statements.

This effectively shuts the door to any outside help. They have overbilled you in the past, and once everyone else is locked out, your fees can no longer be audited. What do you think their next move will be?

SAY NO to PassKey Encryption.

You can schedule a consultation with us where we can go over any questions you may have.

NOTE: You may not have ClientLine; however, we will still want to make sure you do not implement PassKey encryption, which would lock us out and prevent us from auditing your merchant fees.

California Has Flipped Flopped On Surcharging Again!

Here’s the 2024 update:

I say “flip flop” because they banned surcharging in 1985. Then, in 2018, they allowed surcharging as long as they did not mislead customers. Now, they’ve recently banned surcharging again.

So, can you still slap a surcharge on a credit card in California? Spoiler Alert: Nope. As of July 1, 2024, California’s latest surcharge law, SB 478, kicked in, banning most “junk fees” across the board.

But wait, there’s more! This law doesn’t just stop at credit card surcharges, you can also say goodbye to sneaky “service fees” and those delightful “resort fees” at hotels. 

Want the nitty-gritty? Keep reading for all the juicy details on how this affects your business (or your wallet). Just note we are not providing legal advice. Please consult your lawyer regarding your specific situation.

California’s Senate Bill 478: The Rundown

– All fees must be in the advertised price.

– No sneaky add-ons at checkout.

– Taxes are, of course, exempt from this. The state is not going to stop the business from tacking on those fees. 

– You can’t advertise a lower price than what customers actually pay.

– If you ignore this, you’re looking at a $1,000 fine per violation.

It’s all about stopping shady practices and keeping pricing transparent. However, businesses can just add 3% on everything they sell and offer a 3% cash discount if they want. 

Gyms, hotels, airlines, and concert venues will be the industries most affected by SB 478. 

Shockingly, restaurants are off the hook. Thanks to SB 1524, signed just days before SB 478 took effect, restaurants can still charge those beloved service fees and mandatory gratuities—just don’t forget to put them on the menu.

California’s no-fee party has the potential to spread nationwide if the FTC gets its way. The agency is considering similar rules, which could end hidden fees across the country.

The best defense against all of this is to make sure your credit card processor is not overbilling you. Let’s be honest… so many businesses are looking to surcharge because they are sick and tired of the high credit card processing fees. Take advantage of our FREE AUDIT and make sure you are not paying one penny too much. The average overbillings found is just over 40%. 

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