There are three parties involved in every credit/debit card transaction: the processor (Peel Payments), the Issuing Bank (whoever provided the credit/debit card – Chase, Bank of America, Capital One, XYZ Credit Union, etc), and the Association (Visa, MasterCard, etc). The interchange fees go to the issuing bank, the access and association fees go to the Associations, and the processor gets the small percentage left over.
Rewards cards have a higher interchange fee than a standard consumer credit card. These fees are paid to the Issuing Bank by the merchant. There isn’t much a business owner can do to mitigate this except to build it in as part of the price to do business.
Just like with any business, acquiring costs may fluctuate twice a year. The Associations look at interchange rates annually in April and October. There are many factors included in a rate, including the risk to process that card, does it offer a rewards program, the chargeback liability, payment default percentage, etc. When this happens, some processing companies take this as an opportunity to increase “their fees” as well. At Peel Payments, our clients are the most important asset, we will not add a marked up percentage when passing thru an increase imposed by the Association or Issuing Bank. You can take that to the bank!
On October 1, 2015, merchants processing face-to-face transactions need to have the ability to process EMV transactions on an “EMV certified” solution. This will reduce the liability a merchant has on fraudulent transactions. Make sure when upgrading to a new piece of hardware, you confirm that the solution is EMV CERTIFIED and not just EMV ready. There is a large misconception in the market today on how this will impact your business. Ask the question…
There are three simple answers to this question. First, Apple Pay is a very quick transaction. If you want to decrease the wait times in your lines, offer Apple Pay as a payment option. Second, Apple Pay reduces the likelihood of a chargeback, similar to a pin-debit transaction. Most theft on an Apple Pay transaction comes when a card is loaded to a phone and not at the point-of-sale. Third, gain a competitive advantage over your competitors who have not caught up with the times.