In June 2011, 5th/3rd bank’s processing department decided to rebrand to Vantiv. Later, in May of 2014 the company went on to acquire none other than Mercury Payment Systems out of Durango, Colorado (we’ll save our discussions on them for a rainy day). As an industry veteran, it seems the saying, “birds of a feather flock together”, tends to hold true when it comes to the foes of the industry.
Okay, first off, I’m not trying to throw the CEO of Vantiv, Charles Drucker, under the bus. I am, however, pointing out that I am continuously surprised by the greediness behind a giant corporation like Vantiv. For those of you who are unfamiliar with Vantiv, you may have heard of 5th/3rd processing solutions before.
If you are a business owner reading this, then you can probably agree that the industry has gotten much more transparent over the last 5-10 years. With the introduction of interchange pass-thru pricing, business owners can now take advantage of true-cost processing from the processing networks and then expect to pay a small percentage markup (charged in the form of basis points) as well as a transaction fee.
Authorization Fee: $0.05
Discount Rate: 0.15%
With very little effort, seasoned credit card processing representatives can easily explain an interchange pass-thru statement to a business owner and show them how to calculate their effective rate to ensure they can keep their processor honest.
Effective Rate: Amount Debited (Total Fees) / Total Processing Volume
Unfortunately, for the “big bank” processors like Vantiv, that’s not always the case. Just recently, I came across yet another restaurant processing their payments with Vantiv and they were paying over 3% on Visa, MasterCard, and Discover alone.
Aside from overcharging the hard-working merchant, the bigger issue I had with the statement was how they were going about hiding their fees. Feast your eyes on the below screenshot from the merchant statement.
When I train new people in the payments business, I always tell them dissecting statements is an art, not a science. In this case, there’s no method to Vantiv’s madness.
If you are versed in interchange rates (true cost of accepting each individual card) then you will notice there’s something really odd going on here. It appears that many of the different card types have a different percentage markup over the interchange rates.
Why in the world would a processor do that?
They are purposely not showing the merchant their true cost to accept the different credit and debit cards flowing through their business so they can charge whatever the hell they want.
As for this merchant, they were told they would only be charged $0.04 over interchange. A processor can not withhold sustainable margins a $0.04 flat, therefore, it is apparent that Vantiv has invested a considerable amount of time and money into screwing hard working people out of money.
The only other platform that I’ve encountered this type of madness with is World Pay. Both of their processing statements are literally designed to hide their fees from the merchant.
These processors are banking on inexperienced payment reps not being able to dissect the credit card statements.
As for the experienced payment reps, I literally had to go through each individual interchange rate to uncover what Vantiv was extending the merchant in surcharges. See below.
The first thing I always do when I receive a merchant processing statement is calculate their effective rate. In this case, they were paying 3.07%.
If I didn’t calculate their effective rate, it would lead me to believe they were at $0.04 flat. I assume this is precisely what most merchants who process through Vantiv think they are paying.
So, the question remains, “Can Vantiv be Trusted with Your Payments?”