As reported widely Visa and MasterCard have agreed to the largest anti-trust lawsuit settlement in history for $6.6 billion dollars. The problem is that merchant groups still don’t think this is enough. What would this settlement if approved by the courts mean for your business?
- Interchange rates will be reduced by 0.10% and these reductions will last for 8 months.
- Surcharging or adding service fees for credit card and debit card transactions would be allowed (subject to state rules).
The catches:
- Only if your business has interchange plus pricing (like all Leap Payments clients) will you see any of the proposed savings. When you accept card payments with a traditional merchant account you’ll have a tiered pricing structure and your credit card processing account will not see any savings as a result of this settlement, instead their credit card processor will pocket the discount.
- If you accept American Express cards, surcharging is still prohibited and some states prohibit it, so you may or may not be able to add convenience fees to your credit card customers. You also may determine that adding a fee to only credit/debit transactions is not a good business practice as many business owners decide, so changes to surcharge rules have no impact as customers are not happy paying more to process credit cards.
Currently many large retailers such as WalMart, 7-Eleven and some of the largest retail trade groups have rejected the settlement as it eliminates the ability to bring suit again against the card associations in the future, in effect giving them a free pass in to charge whatever they want. So these huge retailers do not want to forfeit the ability to bring additional complaints in the future, as they feel that the rates and fees charged are unfair.
What does Leap Payments think of the settlement? We agree with merchants that the fees charged for Interchange and associated Dues and Assessments are overly complex, and also punitive to hard working business owners who don’t have the time to understand the details of these complex fee structures. At Leap Payments all we do is credit card processing and we’re experts in understanding these fee structures and actively help our merchants change their behaviors to get the best possible rates whether you accept credit cards online or at your retail store. Only with an interchange pass-through account can merchants take card payments at the lowest possible rates.
In addition, when interchange rates do get capped or fall due to pressures from Congress or legal settlements our merchant accounts for small business and large businesses immediately pay less, without even asking. We see bankcard processing fees as a necessary evil for your business and a tax on your sales. What’s important is that you have a bank card processing partner who willingly helps you navigate these ups and downs and puts your interests before their own.
