YOUR BUSINESS AUTHORITY
Springfield, MO
by Karen E. Culp
SBJ Staff
Credit card processing is getting a little more expensive. Visa and MasterCard announced earlier this year that they would increase the fee taken for processing charges by six basis points, said David J. Pollock, an agent for Passagemaker Services, a credit card processing company based in Branson.
The increase is higher than in previous years, Pollock said. In the past 12 years, he has witnessed only five increases to the fee, and those increases have been by either one or two basis points, he added.
Six basis points represents 6 cents on $100, Pollock said. The increase became effective Feb. 1, but didn't begin affecting accounts until March 1.
"Raising this rate is like the Federal Reserve changing its rates to the banks," Pollock said.
Pollock's company represents settlement banks, and those banks are a link in the chain of transactions needed to process a credit card charge. When a customer charges a purchase, it is processed through a network, then a settlement bank, both of which are necessary for the business to receive money in its own bank account for a customer's charge.
The new fee will most directly affect the settlement banks, which could previously absorb small increases in the fee, Pollock said.
"When you are talking about a one-basis-point increase, it is not hard to absorb one point, and then pass on two when another one-point increase comes around, but with this big an increase, there may be some changes in fees for businesses," Pollock said.
One way to combat those increases would be to "shop your rates," Pollock said, or let your credit card processor look for a settlement bank that would provide the best possible rate for accepting credit cards for your company.
Pollock said he is not sure what the increase will ultimately mean for business customers, and that it will vary depending on the size of the business, nature of the business and amount of credit card business conducted.
The decision to raise the fee was a bit of a surprise, Pollock said, but within the jurisdiction of the credit card companies.
"They're the ones determining what they need to make it. It's entirely up to them. This is a sizable increase, though," Pollock said.
Passagemaker Services is a company that originated in Clearwater, Fla., 12 years ago. The company has approximately 2,000 merchants on line and serves all types of businesses, from home-based businesses to large hotels, motels and resorts, Pollock said.
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