by Matt Rej
No matter how long you’ve been accepting credit cards, certain situations will continue to pop up. And most businesses don’t know how to handle them.
Merchants often respond too passively, while others make moves that actually hurt their negotiating position, and some don’t counter at all. These are all expensive mistakes that can cost you tens of thousands of dollars.
Let me walk you through some of the most common processor scenarios that you’ll encounter at least once in the next 6-12 months. I’ll show you what works for each, while ensuring you avoid common pitfalls that favor your processor.
Your Processor Raised Your Rates
Unfortunately, rate increases are inevitable. Depending on your processor, you might be dealing with annual rate increases. The rest of you likely experience rate increases every 18-36 months.
The worst thing you can do in this scenario is ignore it or assume a marginal increase is not worth your time.
Unlike a small increase to your cable bill or Sirius XM subscription, which typically isn’t worth spending hours on the phone to save $10, even modest rate hikes to your credit card processing fees can result in thousands of dollars every month.
If the increase hasn’t gone into effect yet:
- Review previous statements and rate increase notices to see how frequently your rates are being raised.
- If it’s once per year or multiple times per year, you have a legitimate gripe that deserves pushback.
- Even if it’s been years since the last increase, you can still negotiate.
- Respond to the rate increase notice right away, asking for it to be waived or reduced.
Thinking there’s “nothing you can do about this” is a huge mistake. And it ultimately compounds on itself with every subsequent increase.
If the notice is vague:
Not every rate increase notice is clear on what fees are being affected.
Most merchants are fairly transparent about rate increases. They’ll tell you specifically, “Your base discount rate is increasing by 10 basis points per transaction. Authorization fees are increasing by $0.05 per transaction.”
But other processors just send vague notices that your rates are going up or “changing” (which always means an increase). If that happens, contact them ASAP for clarification. What fees are increasing and by how much?
It’s in your best interest to be proactive here instead of waiting until next month’s statement to learn your rates tripled or quadrupled. Then you’re trying to claw back money that’s already been pulled from your account.
If you realized it after the increase was already applied:
It’s not too late to do something about a rate increase even after the effective date.
This is another common misconception that we see when consulting with merchants. And it happens often because businesses don’t always see the rate increase notices that could be buried in blocks of large text on statements or within emails that get ignored.
Your rates are still 100% negotiable, and can be adjusted at any time. While you may have a harder time getting a refund for the difference in extra fees you paid after the effective date, you can still save money by negotiating better terms moving forward.
You Don’t Recognize Certain Fees on Your Statement
There are likely multiple fees on your statements that you don’t recognize or understand. Every processor itemizes charges differently, using their own abbreviations and shorthand that can be difficult to decipher if you don’t know industry terms.
Either way, here’s how to handle it:
- Start with the fees costing you the most money.
- Compare each fee to previous statements to see if it’s a new, increased, or something you’ve been paying a while unnoticed.
- Determine if the fee is charged by the card networks (interchange or assessments) or if it’s imposed by the processor.
If it’s a network fee:
Fees from the card networks are non-negotiable. These are passed through at cost from Visa, Mastercard, American Express, and Discover, and are supposed to appear on your statements without any processor markup added.
That said, you still need to verify that your processor isn’t doing anything fishy here (because trust me, it happens more than you realize).
The first thing you need to do is compare the fee against the public interchange schedules published by the card network.
Make sure the fee name and amount match exactly. If the amount is more, it means your processor is padding your rates, which is an extremely deceptive and unethical practice. It happens when your processor makes it appear as though you’re paying interchange/assessment fees but the rates are higher and they’re pocketing the difference.
Additionally, don’t assume that all fees containing a network name are actually coming from the card brands. For example, an Amex Support Fee is just one of many examples of processor-imposed markup disguised as a network fee.
If it’s a processor fee:
All processor fees can be negotiated. And potentially removed from your account altogether.
The key here is determining if the fee is tied to a legitimate product or service that you’re getting or if it’s a phantom charge designed to increase their profit margins.
This is a common trick that we see from processors all the time. They’ll sell you on a low discount rate per transaction to make it seem like you’re getting a great deal.
But then when you look at your statements closely, you’ll see bogus charges like Risk Assessment Fees or Settlement Funding Fees that increase your effective rate. These may sound legit, but they’re among the dozens of processor fees that are invented out of thin air.
Don’t just ask your processor to explain what these fees are. They likely have a response ready that’s designed to end the conversation.
Instead, come to the negotiation table well prepared. Explain that you’ve done your research and know that the fee isn’t tied to anything they’re offering you. Then demand it be removed.
Your Processor Notifies You of Upcoming Network Changes
As previously mentioned, network fees are non-negotiable. This holds true whether it’s an interchange adjustment that impacts your per-transaction cost or an assessment that’s charged on total volume or on certain types of transactions.
Most merchants know this. So when they get an email from their processor about upcoming changes from Visa, Mastercard, Amex, or Discover, they ignore them.
Big mistake. Processors love to use interchange updates to conceal rate increases coming directly from them.
It’s the perfect cover because these notifications are often buried in large blocks of text detailing the network changes, which are easy to overlook.. And if rates are higher in the coming months, they’re hoping you’ll assume it’s from the network updates.
These notices will often start with something along the lines of, “Due to card brand updates, you may notice new fees and/or changes on your statement effective [date].”
Then they’ll explain the changes in detail, but in a format that’s often difficult to read and often just walls of large paragraphs. But one of those sentences will mention “discount, authorization, and per-item” fees. These charges come from your processor, not the card networks.
Don’t ignore these network update notifications.
Read through it line by line. And if the formatting is too difficult to read, just copy and paste the entire notice into your favorite AI tool (Chat GPT, Claude, whatever), and ask for it to be reformatted in bullets. You can also use Command + F to search for specific terms like “discount” or “authorization” to identify processor markups buried in here.
Once identified, call out your processor ASAP for this deceptive move. Don’t let them raise your rates.
You Want a Rate Reduction But Don’t Know Where to Start
It’s great to be proactive and ask for reductions ahead of increases. This is definitely something businesses should be doing periodically, and even annually to keep pressure on their processor.
But the biggest mistake I merchants make here is asking for a lower rate without context. Simply calling or sending an email saying “Can you lower my rates?” is too easy to decline.
Specifics are much harder to dismiss. Know your numbers and be prepared.
- What’s your total processing volume? If it’s much higher than when you started, you should be entitled to volume discounts.
- What’s your effective rate? How has it changed in recent months or years?
- Talk about your risk profile (card-present, low chargeback ratio, low-risk industry, etc.).
- Audit your statements to identify bogus fees.
- Track your rate increases over time.
Coming to the conversation with something like: “I’m being charged for [X Fee] and [Y Fee] that were never on my statements until [Date]. I also noticed that [Z Fee] has tripled over the last two years. I’ve done my research and know that none of these are mandatory or tied to any service I’m receiving from you.”
This will be a very different discussion than just a general request for better pricing.
You Got a Quote From Another Processor
It’s common for other credit card processors to try and get your business. This usually comes from independent sales reps, and I’m sure you (or someone at your company) gets these pitches at least a few times a year.
Out of curiosity, you may even get a quote to compare your costs.
These quotes will almost always undercut your current rates. That’s by design. The new processor knows they can’t get your business if they’re more expensive, so the only way to convince you to switch is by offering something cheaper.
When this happens:
- Don’t switch processors.
- Contact your current provider and tell them you’re thinking about switching if they don’t lower your fees.
- If they don’t budge or don’t slash your rates enough, then you can use the quote as leverage.
Changing providers comes with extra costs and headaches that merchants often overlook. Those costs end up offsetting any perceived savings, and your effective rate will likely be higher over time.
Using the quote as leverage against your current processor is a much smarter move. You can keep everything the same, and just pay less. But the secret here is not playing that card too soon.
Your Processor Claims You’re Already Getting the Best Rate
This is probably the most common deflection tactic used by all processors industry-wide.
And merchants acting alone have no real way to ask for proof. Your processor obviously isn’t going to show you statements from other businesses, so you almost feel obligated to take them at their word for it.
You still have options.
First, you need to look beyond your base rate. Instead of looking purely at the discount rate per transaction, which might be low, you need to add up all of your processor fees and calculate that against your total volume.
If your processor is only charging you 0.05% + $0.05 per transaction, that may actually be their best rate. But when you look at all of the other miscellaneous junk fees they’re charging you, the actual markup might be closer to 0.80% + $0.30 per transaction. That’s far too high.
You can also work with a merchant consultant. Here at MCC, we’ll audit your statements for free to identify you’re actually getting a good deal. If we find bogus fees or inflated rates, we’ll negotiate directly with your processor on your behalf to get them fixed.
If they try saying “you’re already getting the best deal” then we have the proof to show they’re lying. We’ll show them statements from other merchant accounts under their portfolio with lower rates and junk fees removed.
Our team knows what the rock-bottom rate is for each processor, and we know how to get those rates applied to your account.