Why it seems like rates are increasing each month

Increasing fees

Increasing fees

Why does it seem rates are increasing each month?

For one, you may be selling more this month than prior months.  That’s the easy answer, but did you know Visa and MasterCard increase rates twice a year in April and October?  In addition, the card ‘type’ your customer uses is what drives the rate.  For instance, a US Visa debit card that is swiped will have the lowest interchange rate but if that same card is key-entered into your terminal or gateway, the fees will be slightly higher.  Not having the card in hand increases the risk, therefore increases the rate.  One of the highest interchange rates is the business or corporate card or a rewards card.  As the merchant or business owner, you can’t control what type of card your customer uses and unfortunately, you take the hit by paying higher interchange fees so your customers can reap the rewards of those airline miles or other rewards.

Excerpt from Forbes, February 11, 2016 “Who Pays For Your Credit Card Rewards”: all major U.S. banks issue credit cards that offer some form of rewards – whether it be points, miles, or cash back. The reward space is extremely competitive, as consumers become increasingly aware of benefits like award travel. The idea of earning rewards has penetrated the mentality of shopping for credit cards. After surveying credit card users, we found that nearly 32% consider rewards and bonuses to be the most important factor in evaluating a card offer – above other aspects such as annual fees, interest, or brand.

So what can you do to help keep your rates low or consistent?   Have a rate review with your current processor every 6 months.   Or, contact us.  We can analyze your statement for free and show you the hidden fees, if any. We simplify the process and the fees for you.  Email: info@simplyccp.com or call us at 631-392-8169.