By Mark J. Sheffield – Posted in Best Practices – Rural Lifestyle Dealer
As many times as I’ve discussed with dealers how credit card processing works (or doesn’t), there are still a broad swath of dealers who don’t understand how transaction fees are calculated, or what they can do to reduce those costs. This was also a hard article to put together because none of the parties that benefit from this opaque process were willing to speak on the record.
So, on to the meat of this topic.
There’s a reason why the ability to compare and shop the credit card merchants is so complex. It is designed that way. In building a system that involves a multitude of parties and layers within the system, it’s easy to find areas where costs and fees can be added in, ones that are easy to overlook. Do you remember the movie where the guys modified a computer system so that the small amounts rounded off from transactions were deposited into their banking account? They thought that it would generate a few bucks, but quickly turned into millions of dollars. That movie could have easily been about the credit card industry. Each day you accept credit and debit cards, some of your profits are siphoned off by a third party.