01 Aug Watch Out for Hidden Rate Increases in Your Merchant Account Statement
Have you noticed a hidden rate increase in your merchant account statement? Are your totals different than you expected? Here are the ins and outs of hidden rate increases on your merchant account statement.
Banks Are Required By Law to Notify Merchants of Rate Increases
Under the law, banks must notify merchants of any changes in their contract terms. Prior warning of a rate increase (i.e. in 30 days), gives the merchant plenty of time to find a different credit card processing firm. If the customer does nothing within the allotted time frame, then the rate increase may go into effect automatically.
Read the Fine Print
If a bank sends you a notice, then read the fine print carefully – there is probably a change therein. Here are some vague statement terms where you might find hidden rate increases: “undisclosed,” “added,” “downgraded,” “mark-ups” or “free.” Any seasoned business professional understands that all costs must be accounted for and nothing is truly free.
Financial institutions have very low profit margins and must pass certain costs onto their customers. Merchants should also read the “footnotes” on their account statements. They may be confusing, but many hidden charges are placed there.
Why was my rate increased?
There are a number of reasons for merchant account rate increases: mandated by law, brand decision or company-specific. Financial experts have noted that some credit card companies have a scheduled rate increase every 3 years or so. Sometimes, there are changes in the definition of “qualified” transactions.
What does this mean?
Merchants must read the fine print not only on their account statement, but also on the original contract. Each statement is simply a summary of the charges for a particular time frame. The original agreement should have a glossary of terms or codicil.
Some words might have industry-wide meaning, while others might be company-specific. Beware of the “made up” terms, because this is usually where charges are hidden. There is nothing wrong with contacting your credit card processing provider to ask the definition of words on your statement.
Hidden rate increases on your merchant account statement can be confusing. If you just sit down and carefully cull through your documents, you should find the point where the rate changed. Keep your credit card processing provider on its toes and every one will be happy in the long run.