Navigating Padded Interchange Fees on Merchant Statements

This post begins our series on spotting unethical billing practices by Merchant Account Providers, specifically focusing on the deceptive practice of padded interchange fees.

Understanding Padded Interchange

Padded Interchange occurs when providers add undisclosed markups to the interchange rates published by card brands, deceiving businesses about the true costs. For example, a Visa Rewards 1 card might have a true interchange cost of 1.65% + $0.10, but is shown as 1.80% + $0.10 in your statement, hiding a 0.15% markup.

Why It Matters

Such practices not only mislead businesses but also erode trust across the industry. Providers often complicate statements to conceal these fees, counting on the difficulty most have in verifying rates against publicly available information.

avoid Padded Interchange Fees on Merchant Statements

Steps to Avoid Padded Interchange

  1. Choose Transparency: Opt for a merchant account provider that offers clear, Interchange-plus pricing and commits to transparency.
  2. Verify Rates: Regularly compare your statement rates against the card brands’ published interchange rates.
  3. Professional Review: Consider a professional statement analysis to identify any hidden fees.
  4. Educational Tools: Utilize resources like our Merchant Service Provider assessment checklist to evaluate your provider’s transparency.

Protect your business from unethical billing by being vigilant about padded interchange fees and partnering with truly transparent providers. Awareness and education are your best defenses against these deceptive practices.

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