At the mercy of the credit card processors - Merchants

This is why I think Mastercard/Visa/Discover/American Express are the highway bandits of the digital age. This is my statement this month for my credit card processing (cropped so you do not see the actual amount charged on each line item). Twenty-six line-item charges. That's right... 26. Each charge is different based on what kind of card is used by a customer, some cards cost more to process (rewards and business cards) than others. How is a merchant supposed to figure it all out? Short answer is - its impossible. You take what they charge you and run on average percentages per month. What's really amusing to me is the two to three phone calls that come in every single business day where another processor says "We can beat your rate from your current processor, we guarantee it". Oh yeah? How is that? I can't read it - and they can't read it, either.

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My favorite line item fees?

"Merchant Compliance Program Fee" $ 9.95 a month : this is to administer to me a true/false test of about 50 questions I answer on the internet. Any FALSE answer is wrong. Any TRUE answer is correct. Brilliant.
"Clearing and Settlement Fee" $ 81.90 a month : This is a fee they charge you to take your money. A bill to collect a bill. Imagine if the phone company charged you $ 5 a month to collect your phone bill...lol

It used to be a flat fee, years ago - a straight percentage of the bill. Now these companies are like gangsters, they add fees that make no sense and the merchants have no say in it. We accept the fees we can't understand or don't accept credit cards - that's the choice. I wish Congress would pass a law requiring the banks an credit card companies to charge a single flat fee, but all laws for these kind of things are consumer based, not business.

The credit card companies have done a marvelous job of pitching use of the cards to everyone, and its the main form of currency now. The merchant (that's me) has to plan on an average percentage and pack it into the retail price of things. When I first started this business 30 years ago, about 5% of sales were in credit cards, now its 90%.

The Keeping Room will always offer you a 2 % discount if you choose to pay via check or wire transfer, or cash. That's on any order, just ask for it if you want it. Some people want the rewards points, others like the cash discount. You can have your choice! Meanwhile, I will continue to be totally frustrated by the way they charge fees...

It definitely looks confusing and impossible to audit, let alone plan for. I guess the majority of the line items are for the various card types within the major card vendors. Looking at MC for example it looks like the Fee varies in-part based on the specific credit risk factor relative to the folks eligible for some of the card types. Obviously the Rewards programs associated with each card also impact the actual cost to the credit card companies as well. I was curious about the "Non-Swipe" Transactions, but perhaps it is Phone or Online Transactions vs. those that handed you their Card or Self-Swiped their card in-store. In truth most Utility Company statements or Entertainment Company statements coming to the publics homes are also packed with totally mysterious fees. The Banks are among the worst. My personal favorite has always been the telephone company's "Line-Backer Fee" which most folks don't know covers the twisted-pair lines failing within you walls. When ATMs began back in the 70s, the "savings" which accrued to the Bank, took a back seat to the "convenience" then available to the Customer. Now each ATM Transaction appears to have become a profit opportunity for the financial institutions.

I guess a new unpredictable cost associated with your taking credit and debit cards exists with the liability moving from the Bank to the Retailer with the chip-embedded cards. I'm surprised there isn't someone offering the Retailer a "Consolidated" and Contract-Term guaranteed Flat-Fee for all Credit and Debit Transactions. Then that company would gain their cost advantage by the Volume of business they control across the market place. Something like all the "choices" we offered now for our Gas or Electric usage. The Retailer would then have a totally predictable cost vs. an unknown or Averaging scheme.

American Express has some of the highest fees to merchants, or at least they used too. They were the one card I didn't accept when I had was running my photography business because it just cost too much.

We are becoming a cashless society now. Most transactions are done by credit card. There is is so much fraud and theft with this system that it's not a good one.

Duane,

You can thank the folks just up the road in D.C. for that mess. Dodd-Frank and the ridiculously-named CFPB (Consumer Finance Protection Bureau).

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Originally Posted by Kyracer57

Duane,

You can thank the folks just up the road in D.C. for that mess. Dodd-Frank and the ridiculously-named CFPB (Consumer Finance Protection Bureau).

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Sorry, but that's not at all the reason for the fees.

Most of the fees listed are interchange fees from the banks and financial institutions that issue the cards. The fee normally goes to the bank that funds the transaction, and is meant to cover the cost of handling the transaction plus the cost of covering the associated risk. The interchange fees can vary depending on the nature of the transaction -- for example "MC Merit 3" represents a Mastercard interchange fee where the card was present, while "Merit 1" is a transaction where the card was not present; "VS Signature Pref CNP" refers to the interchange fee charged by Visa for a "signature preferred, card not present" transaction. An "assessment fee" is an additional charge from the credit card company, ostensibly to cover the operating costs of managing its network. The "digital enablement fee" is an additional fee for a "card not present" transaction.... the list goes on, and on, and on, because there are several major credit/debit card brands, huge numbers of issuing banks, many different types of card even under a single credit card brand, and several different types of transaction.

The sort of itemization provided is typical for a statement to a merchant whose processor is applying an "interchange plus" pricing schedule.

American Express: Back in the 80's and 90's I had Am Ex, then dropped them for about 15 years in between. Customer pressure made me relent about two years ago so I picked them up, again Yes, their rates are higher because their traditional card doesn't have interest to their user's (they are expected to pay in full each month) so they have to ding the merchant for it. However, they are the only credit card company that refunds the merchant fee on returns (something they just recently began doing). And that policy has been the single most annoying one from all the credit card processors. If a customer buys something on a card and then returns it, the merchant does not recover the processing fee. This may seem trivial, but it can be very expensive. For example:

I have had a customer take out $ 30,000 worth of hand-made Turkish rugs and other pieces, paid for on a credit card, then return them all the following week*. Using an average CC processing fee of 2 %, I as the merchant pay $ 600 for my processing fee that does not come back to me with the refund. So not only did the customer not make a purchase, I am out $ 600 negative on the deal plus the time it took to pull them off the floor, roll them up, deliver them, and re-install in the store afterwards (about 4 hours). This absolutely is intolerable as far as I am concerned, which is why I have restocking and order cancellation fees on items and deposits made with credit cards. I waive those fees for cash/check/wire transfer transactions. Interestingly enough, when I discuss how the credit card processors do this with other small merchants, they had no idea they were not getting fee refunds and they assumed they were. Why did they not know? Because the statements are so confusing to read they never study them and do the math on them.

My last gripe is who becomes the stuckee on a fraudulent transaction such as a stolen card or identity thief. People who use the cards think they are, and the banks that issue them like everyone to think they are, but the real stuckee is the merchant, who gets a chargeback in the vast majority of instances if they shipped or handed over the goods.

* On these rugs, turns out this person was using my store as a free rental store, buying them for her house along with other pieces for a big political party fundraiser event at her house. Everything was returned after the party. How did I know? Other customers came in and said "Mrs. XXXXX had those same rugs at her house this weekend". Next time Mrs. XXXXX came into the store about a year later and tried to do the same thing I told her to leave and if she ever set foot in my store again I would have her arrested for trespassing. Mama Collie didn't raise a fool.

Wow. That takes an amazing amount of gall to walk into someone's place of business and pull that stunt. It still comes back to those dastardly politicians, Duane. You exercised a lot of self-control to ONLY THREATEN to have her arrested. Please tell me it wasn't your Representative or Senator.

I don't recall whose fundraiser it was actually, that was many years ago. She was not the only one that did that back when I was a little naive and had a 100% satisfaction guaranteed policy (I was thinking Nordstroms). I began to see a pattern where some people would come in and buy several pieces off the floor, adamant about delivery on a certain date - and then return everything the next week. They never kept any of the many items they bought, including lamps, pictures and mirrors. I believe one person - like that woman - figured out the gullibility of The Keeping Room and then told her friends, and they told their friends, etc. At first, I couldn't figure it out - how odd that everything went out and then everything came back. It was a lot of work to tear apart to the store to deliver it all, put the store back after the pieces were gone on the truck, and then re-configure once they were returned. That last incident was the final one, and that was the end of our 100% return policy like Nordstrom's. Once I put re-stocking fees in place then all that nonsense ended. Store policies are always the result of bad-apple customers! It only takes a few people to ruin it for everyone.

I was just reading over the forum and saw this post. It just amazes me the number of people that will use anyone and everyone. It's just plain wrong. Most merchants are more than happy to accept a legitimate return. But to buy something just to use it is so wrong. That's why stores don't take back formal wear if the tags have been removed. People were buying dresses, etc. and wearing them to an event and returning them the next day. I try to keep in mind that a merchant has to pay rent, light bills, insurance, workman's comp insurance and that costs money. And they have to make a profit or they won't be in business very long. They aren't supposed to sell you something at wholesale. I've always said I may not think a price is a "great deal" but if I think it's fair, I'm satisfied and will buy from that merchant.

My experience after doing this since 1986 has been that 90 % of customers are a pleasure to deal with. About 8 to 9% % can be challenging, and difficult, however with patience and good communication they can usually be satisfied or at least informed and rational. It's the last 1 to 2% that are the ones why store policies exist, and I think that's across the board in any service or retail business. They will do whatever they can to try to get ahead of the merchant, in any way they can and that includes being dishonest and highly emotional.