credit card interchange fees -voiding transactions

Nov 27, 2007 2 Replies
J

I have a general question about interchange fees and my merchant processor is of little help.



I also thought I would post my observations to help other people as well.



Credit cards are arguably a necessary evil, but the fees are crippling our business. We have tried to find ways to reduce the fees but getting accurate information is like pulling teeth. I guess the associations and processors have an incentive to keep people in the dark.



My main question is how to handle a Void vs. a refund. If we run a charge for $100.00 and later refund $100.00 to the same customer, are we charged per transaction fees and interchange fees twice for this transaction? It appears that we are, but our processor wont give a definite answer. This doesn't seem fair.



I realize that we can avoid fees by running a void on the transaction before a batch is settled. But after a batch is settled, is there a way to void the transaction and not be charged interchange fees on the original sale transaction (or the void)?



Here are some other tips I can share:


  1. always batch out each day before the close of business time. Your processor won't tell you what this time is, but it is usually around 5 pm each day. This will get you your settlement funds a day earlier.


  1. Always authorize and settle batches of transactions within 1 day. This will lower your interchange fees in most cases for qualified transactions.

  2. Probably obvious, but always swipe cards (if present) rather than manually entering.

If anyone has any other ideas, I would love to hear them.



Best of luck, Jason


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M

Jason,

Like you say, information is very hard to get. I think, for the most part, the front line processor reps do not know the answers. Try to find out what the network fees are for the different Debit card networks!

At least with my processors and contracts, here is how it works: MC & Visa refund the discount fee, I have never checked about the transaction fee. AMEX began a new policy about 2 years ago and they DO NOT refund the discount rate on refunds any longer. This really hurts. If you issue a $1000 refund and you are at a 3% rate, it just cost you $30.

Unfortunately the big credit card companies have us by the #$%$ and they KNOW it. The bottom line is you must be aware of the cost and include it in your calculations for markups. The consumer pays in the end.

Marc

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C

Another thing you need to consider if you are using a stand-alone terminal. Try to get supplies for your terminal printer included. I have looked at a lot of processors and most of them do not include supplies which can add up to over $50 a month. If you are using the integrated solution built in with RMS you have to pay for your supplies of course, but with seperate terminals you can save a lot of money by getting them included. All I had to do was ask my processor and with all the competition in the processing market they agreed without a hassle. As to your question about a void versus refund, with my processor if you void the sale the same day as the original transaction you won't get billed again, however, if you refund to the card the next day you will get charged. Craig

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