4 Hidden Payment Processing Costs Hurting Your Business

Confusing pricing structures. Complicated merchant statements. Misleading promotional rates. Extensive fine print. Card networks and credit card processing companies have a deep bag of tricks to keep merchants from understanding their true payment acceptance costs. These tactics are designed to create confusion and add to your payment acceptance costs without drawing attention, so you’ll need to be vigilant.

Look out for these four common hidden payment processing costs:
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1. Padded assessment fees

Every type of card transaction has a wholesale processing cost made up of two legitimate, non-negotiable fees: interchange fees (paid to card networks) and assessment fees (paid to card brands like Visa, Mastercard, and Discover).

Interchange rates are easy to check — and steadily increasing. Not only do Visa and Mastercard adjust rates twice a year, but they’re also planning the biggest fee hikes in a decade.

By contrast, most card brands don’t publish their assessment fees.This lack of transparency makes assessments a prime target for price gouging. To make matters worse, each card brand has a wide array of additional fees with different naming conventions and structures, which makes them hard to pinpoint and consolidate.

Although assessment fees should range from 0.13% to 0.15% per transaction, some processors will pad them by a few basis points which can easily go unnoticed. For instance, on a $100 transaction, the difference between 0.13% and 0.135% is only half a cent. But if a business had $10 million in monthly card sales volume, its processor would pocket $6,000 a year in hidden fees masked under the guise of assessment fees.