Reforming Retail

ReformingRetail’s Payment SOS: First Data Dec 2019

ReformingRetail is continuing with a payments statement obfuscation series. We call it SOS for short, and it’s coincidentally a very appropriate acronym. We aim to publish an article in the series twice per month, but it really depends on the shenanigans that we see in the market. Both the statements and analysis are being provided by Merchant Cost Consulting, an advisory group of payments experts that helps merchants lower their processing rates.

These set of changes come from First Data and First Data ISOs. Merchant Cost Consulting (MCC) noticed these changes in December of 2019. Unfortunately that means that you may already be suffering from the negative economics longer than you should since it takes us a while to publish this, but please look at your statements and remember you can always reach out to us or MCC directly if you need assistance.

First up is a notification of changes from the card network Mastercard. These pricing changes are made twice per year by the networks (in April and October) and there’s no predicting which interchange category will change or by how much. MCC saw this notification on several First Data statements.

We also see Mastercard charging additional fees if a merchant processes transactions under $1.00. In these cases there will be a rate increase of $0.05 per transaction when a merchant processes a reversal for a transaction that is done in an ecommerce/non card-present environment. 

Next we can see a dubious fee charged by the First Data ISO Advanced Merchant Services. Here we have a $95 annual fee. MCC assures us that they have gotten this fee refunded with their customers, so it’s worth calling in to make the change and ensure you don’t get hit with this fee going forward.

The next fee comes from First Data’s CardConnect group. This is another annual fee but this one is $119. We love how they call this an “annual membership fee”. Oh really? For what? We get access to the locker room and club house for this, do we?

MCC is also seeing some First Data statements with an added fee that equates to $0.02 per transaction. It might not sound like much but it really adds up: assume you’re a merchant with an average ticket of $10 who does $50,000 in monthly revenue. That means you’re turning through 5,000 transactions per month, and at $0.02 per transaction we’re talking about an extra $100 a month. 

But think of all the value! 

The good news is that MCC has had this fee waived too.

The next piece comes from First Data’s Leaders Merchant Services ISO, and boy do they have a real racket going on.

Here Leaders Merchant Services is increasing the PCI Non Compliance Fee up to $59.95 starting January 2020 if you merchants don’t complete the PCI Scan and survey. MCC tells us, relatively speaking, that this is a large increase as most processors don’t assist with completing PCI compliance or even offering guidance. 

Why help when you can just raise rates though, right?

The next bit is a doozie.

Here Leaders Merchant Services is saying that they may increase the discount rate by 0.5%, or fifty basis points, on Visa, MasterCard, Discover, or Amex transactions. This applies to interchange plus pricing. They may also increase your monthly minimum fee, which means that if a merchant doesn’t process a certain volume of sales, they could be hit with a fee of $39.95.

If that wasn’t enough value-adding-awesomeness, a batch fee of $0.35 could be assessed per batch. For background, a batch is either automated by your processor at the end of every work day, or done manually by the merchant, to reconcile and send the transactions that occurred during a day to be processed by your merchant service company. 

Then there’s also a $0.30 Non Qualified rate differential fee, which is an additional per-transaction fee added to cards that Leaders downgrades. Downgrades can occur for multiple reasons such as not entering all information of a credit card, not entering the correct shipping/billing address, or a multitude of other reasons; it’s a bit of a gray area

You’re probably thinking there’s no blood left to squeeze, but you must be new to payments. There’s a $9.99 “enhanced security package fee”, which MCC can and should be immediately refunded. Its claim is to keep more of your transaction safe, but more so a money grab by the processor. And there’s a $5.00 “online access fee” which, laughably, is to allow merchants to access the online portal. Yea, because web hosting costs that much, right?

Another day in payments land just brings all sorts of goodies.

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