In January 2014, two of the industry’s largest credit card processors, Heartland Payment Systems and Mercury, began a heated battle in federal court. The issue at hand is the underlying problem most people who accept credit cards know in their gut; there are processors who engage in deceptive practices and regularly up-mark their fees. Merchants who process their cards through one of these two companies, or even through a different provider, might consider paying close attention to the case and check with a trusted source whether they are victims of what industry calls “grey charges”.
Heartland contends that Mercury is engaging in false advertising, unfair competition, deceptive trade practices and taking straight interchange fees and adding a couple of pennies to each authorization. Who cares about a few pennies? A few pennies multiplied over millions of transactions have a way of adding up. In particular, the issue at hand is that there are unethical processors in the industry who deceptively hide its excess profits in the interchange fees charged by the credit card associations and the issuing banks.
Most merchants accepting credit cards have no idea of the type of plan they have, or whether their processor. If a merchant is on a straight interchange pass-through plus plan (the most competitive plan in the industry), they should check certain fees on their statement to make sure they are legitimate. For example, Visa’s acquirer processor (APF) and MasterCard’s access and brand usage (NABU) fees are both less than two (2) cents per transaction – Heartland is contending that Mercury sometimes charges customers up to nearly six (6) cents per transaction without informing them of the markup. These types of activities are why the credit card industry and its processors often have a bad reputation.
As a first step, merchants should check with a trusted source whether they are in fact on an interchange pass through pricing plan – the only transparent plan of the five available on the market – and if so, whether the standard fees are not being marked up. The answer to either question might yield some surprises that if dealt with correctly can yield tremendous results towards the fiscal bottom line.