7.  Fee Increases & Ancillary Charges

Aside from simplicity, bundled billing arrangements often appear to offer one more advantage: price protection.  As a matter of course, the Card Associations adjust their Interchange rates from time-to-time.  These changes usually occur twice per year in October and April.  While some Interchange rates go down, many increase.  Under a strict bundling arrangement, the payment processor would have to absorb those increases resulting in lost profit.  This would be a windfall for the merchant.

This, of course, comes down to what you have agreed to in your contract.  It is not uncommon, however, for processing agreements to provide for Interchange related fee increases.  Merchants should therefore review their proposals and contracts thoroughly prior to entering into any agreements.

While examining these documents, merchants should also be on the look-out for extra or ancillary fees.  These may include charges for authorizations, chargebacks, network access fees, reporting fees, cross-border charges, etc..  In principal, most payment processors are entitled to such fees as processors incur costs related to these functional areas, and should expect to make a profit.  It’s the merchant’s responsibility, however, to determine that these functions are in fact required, and that the fees are relatively competitive.  Merchants should also be sure to include these ancillary fees when accounting for their total processing costs.