One Memo. Ten Basis Points. $105,000 a Year.

It arrived as correspondence. A short notice that rates would increase by ten basis points across all card types, effective the following cycle, of the kind that lands in accounts payable and gets filed. On $105 million of annual volume, that piece of paper was worth $105,011 a year to the processor.

Rate increase noticeRetained rebatesOngoing monitoringRetail

$105,011

Value of the increase, blocked

$315,322

Total annual savings identified

$67,505

Interchange rebates retained

$105M

Annual card volume

The business

A home improvement and building supply retailer processing roughly $105 million a year across six merchant accounts, with an average ticket of $119. Predominantly card present retail with a mix of consumer and trade customers.

What happened

The audit was already underway when the notice arrived: a ten basis point increase applied to all card types, effective the next cycle. No explanation was offered and none is required. In an unregulated industry, a processor may generally raise a merchant’s rate by giving notice, and a merchant who does not object is usually treated as having agreed.

$105,011

Annual value of a single ten basis point increase on $105 million of volume. A third of everything this audit found was simply not letting it happen.

The increase was withdrawn. That is the entire intervention on that line: somebody read the notice, understood what ten basis points meant against the volume, and said no in time.

Why these notices work

A rate increase notice is engineered to be uneventful. It is short, it is routine in tone, it uses a unit of measurement most people cannot convert into money without a calculator, and it arrives in a department that processes hundreds of vendor notices a month.

What it looks like

A routine vendor notification
Ten basis points, which sounds like almost nothing
Effective automatically unless someone objects
Not addressed to anyone whose job is to evaluate it

What it actually is

A unilateral price increase on the company’s third or fourth largest expense line
Worth $105,011 a year at this volume
Reversible if challenged promptly
Compounding, because next year’s increase starts from the new number

The rest of the audit

Separately from the increase, the existing rate came down from 14 basis points to 4, worth another $105,011 a year. And underneath both sat the largest hidden finding.

Interchange rebates retained: $67,505 a year. Rebates due back to the retailer that were kept instead, on volume this size, for years.
A qualification discount line: $20,388 a year, billed at $1,699 a month under a name that reads like an interchange category rather than a processor charge.
Per transaction fees: $11,814 a year across six merchant accounts.
Interchange downgrades: $3,084 a year. Modest, as expected in a card present retail environment with a $119 average ticket.

The results

A pending ten basis point increase blocked, worth $105,011 a year
Discount rate reduced from 14 basis points to 4, worth $105,011 a year
$87,893 a year in retained rebates and undisclosed charges recovered
$11,814 a year in per transaction fees reduced
$3,084 a year in interchange downgrades recovered
$2,509 a year in miscellaneous charges removed
$315,322 total annual savings identified

Industry context

In an unregulated industry, a processor generally may change pricing by giving notice, and a merchant who does not object is usually treated as having agreed. There is no approval step, no regulator to notify and no requirement that the notice explain itself or quantify its effect in dollars.

That is why increases are communicated in basis points. A basis point is a hundredth of a percent, which is a unit chosen for professionals and which almost nobody converts into money on the spot. Ten basis points sounds like an adjustment. On $105 million of volume it is a six figure annual transfer.

The notice also arrives in the least equipped part of the organization. It is addressed to a billing contact, not to whoever owns the cost line, and it competes for attention with hundreds of routine vendor communications a month.

Why this case matters

The timing here was luck. The audit happened to be in progress when the notice arrived, and somebody who understood basis points was already reading the mail.

That is not a strategy. Rate increases are not annual events on a predictable schedule, they arrive when a processor decides margin needs improving, and they succeed by default. The only reliable defence is somebody reading every statement every month who converts basis points into dollars automatically, which is precisely why weAudit’s engagements are monitoring relationships rather than one time projects.

How to check this on your own statement

1. Convert basis points to dollars immediately, every time

Annual card volume divided by 10,000 is the annual cost of one basis point. Keep that figure written down somewhere the accounts payable team can reach it, so a notice can be evaluated the day it arrives rather than the year afterwards.

2. Compare last month’s statement against the same month last year

Line by line, on rate as well as on fees. Increases that were never announced, and increases that were announced and missed, both surface this way and in no other.

3. Find out where processor correspondence lands

In most companies nobody knows. The notice goes to whoever signed the original application, who may have left. Establishing a single named recipient is a five minute fix that prevents the expensive version of this case.

4. Check whether interchange rebates are reaching you

This audit found $67,505 a year of retained rebates alongside the rate increase. Rebates credited by the card networks are the merchant’s money, and their absence from a statement is silent by nature.

Questions we get about this

Can a rate increase actually be reversed?

Frequently, if it is challenged promptly and the merchant has somewhere else to go. The leverage decays quickly. Once the new rate has been paid for several cycles without objection, the conversation becomes a renegotiation rather than a reversal.

Why would a processor raise rates on a good client?

Because margin targets are set centrally and applied across portfolios, and because the great majority of notices are never questioned. It is rarely personal and it is rarely a judgement about the account.

How do we stop this happening again?

Somebody has to read every statement every month and convert every change into dollars. That is the entire mechanism, and it is why our engagements are monthly monitoring relationships rather than one time projects. Nothing else catches a notice in the window where it can still be reversed.

Did your processor raise your rates this year?

Most merchants cannot answer that with certainty, which is why the increases keep working. weAudit monitors every statement, every month. The first audit is free.

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