Credit Card Processing - The True Charge

Credit Card Processing - The True Charge

Credit Card Processing - The True Charge

The prices for small businesses are massive when it pertains to card processing. Card processing is in critical need of an alteration in how merchant rates are charged. What exactly are the card processing services that small establishments pay for, and are they paying an excessive amount?

Card processing fees

The British Retail Consortium (BRC) has developed a quite comprehensive report based on the charges of card processing in 2009. Their findings are interesting and tell us that from the principal payment methods available to the public: cash, cheque, cost cards, debit cards, cash, and ultimately credit cards, its this final one, the credit card that is accountable for the greater amount of the expense of payment collection.

Out of ?588.4m in 2009, 47.2% of this was paid to be able for suppliers to collect payments from credit card buys, averaging at 33 pence per exchange. That is costing the enterprise owner 33 pence per deal to obtain their money. So exactly where does this money get spent? We really don't think that the bankers are quite keen to give up this information, but we do think that there needs to be a considerable change.

The largest expense linked to card processing is the merchant support charge, and this accounts for 81.2% of the transaction fee. The rest is paid for such things as: fraud, cash in transit, bank rates and cheque guarantor. The merchant service fee covers such things as: processing charges, card issuers' interchange service fees, and card scheme rates.

What can be done to reduce card processing fees?

The BRC recommends that the card processing costs should be billed on a pence per deal groundwork akin to cash, and surely more in line with its 2.1p fee per exchange. But in order for the BRC's recommendations to be carried out, credit card processing fees must be lowered together with bank costs to be able to make things fairer for the small enterprise operator who is inclined to be struck the hardest of all by the merchant services fee.

Cash remains by far the most preferred form of payment in the UK and suppliers can cope with the merchant rates linked to this simply because they are reasonable. Even so, if cash is to lose its strength as quite a few would say, then unsurprisingly debit card and credit card purchases are going to amount to a bigger portion of sales in the not too distant future. Currently cash signifies 52% of sales in 2009, but it was 60% in 2007; so there's certainly a sluggish drop in its take advantage of. At the other end of the scale credit and debit card purchases are absolutely increasing; not fast, but obviously increasing.

If this is indeed what organisations like The Payments Council want to see come about, then the BRC really has to be taken very seriously and card processing premiums must fall into line in order to make the shift a lot easier and much less damaging to small enterprises and people who find credit card processing a drain on their resources.

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