If you’re like me, you looked around for a good credit card processor with a low rate, signed up, and didn’t look back. After all, you’re too busy to try figure out all those lines on the credit card statement right?
Unfortunately, that turned out to not be such a good strategy for me. Though I was given a low rate on the front end, the processor was charging me (and I think this is an industry standard) one or two months later for “interchange rates.” So months after the transaction, another fee would appear – meaning that low interest rate wasn’t really so low and it was impossible to figure out what I really paid.
When I called up the processor (Merchant Express), it got worse. Seems those interchange fees are fees the bank pays to their customer when the customer uses a rewards card. Crazy, but us merchants are subsidizing and paying for the bank to offer a special rewards program! So if Bank of America offers you a toaster for 60,000 points, I’m actually paying for it and not Bank of America. I think that’s B.S. and I’m really surprised the merchants haven’t revolted – it revolts me to pay for someone else’s advertising.
Here’s an excellent article on cracking the credit card processing code.