Every year in April and October, the card brands publish interchange adjustments. For those who don’t know, interchange makes up roughly 90% of your processing costs (some more and some much less like those processing with Stripe or Square). Interchange costs are uniform across the multiverse – everyone has the same interchange costs. For this reason, when they change, the ripple creates waves.
You may be thinking – I thought the card brands worked independently? How is it that they always act in concert with each other? That’s a topic for another day but let’s just say that the 800-pound gorilla’s work together so we little guys have to work together to win.
Alas, we digress… back to interchange.
While interchange adjustments are inevitable, many processors piggyback on these events with cost increases of their own.
This is where we step in and try to shed some light on the matter.
Here are some things to look for on your statement announcements:
- Legitimate interchange adjustments are very specific and typically limited to a few line items at most.
- Legitimate interchange adjustments can be verified using the internet and visiting the card brand websites (Visa, MasterCard, Discover, American Express)
- Processor piggyback adjustments will typically be sweeping across an entire category or method of acceptance. Here are a few examples:
- Effective April 1, 2022 there will be a rate increase of 5 basis points and transaction fees will increase by 2 cents per submitted transaction.
- Effective January 1, 2022 your discount rate with us for Visa, MasterCard, and Discover transactions will be assessed an additional 0.50%.
- Effective October 1, 2021 your Network and Processor Access Fee will be billed at 0.15% on your Visa, Mastercard, American Express, and Discover transaction volume.
- Legitimate interchange adjustments will not impact your “discount rate” – those are processor piggyback fees and are only used to increase the profit of your processor.
We hope that these simple tools will help you avoid being taken advantage of by some of the bad apples in our payment processing tree. If ever you want to get a second set of eyeballs on your statement or help to understand whether you’re being treated fairly by your processor, we’re happy to help – no obligation. Simply reach out by calling or submit a form here.
