What is the Newest Hidden Merchant Fee from Credit Card Processors?

Ginger HollowellCredit Card Processing/ Merchant ServicesLeave a Comment

Merchant Services Hidden Fees

The credit card processing industry has upgraded its efforts to protect merchants against fraud.  One of the best advances has been introducing the chipped card versus the older magnetic swipe technology.  That magnetic stripe was easy for fraudsters to extract credit card numbers and even address information to manufacture and duplicate peoples’ credit cards. Chipped cards are challenging for fraudsters to replicate because the transaction works with an encrypted code representing the credit card number instead of the actual credit card number.

The industry forced the chipped card technology upon merchants a couple of years ago by shifting the liability for chargebacks unequivocably to the merchants who don’t have terminals with this new chip device. Still, some merchants are slow to adopt the technology.  Maybe they, in particular,  didn’t get much fraud and so chose to save money by keeping their old terminals instead of replacing them. Many processors now try to nudge merchants further to embrace the changes and purchase the newly chip-compliant credit card terminals.  The new “hidden fee” to enter the world of credit card processing is called a non-EMV Compliance Penalty. This new “hidden fee” is listed on the merchant statement as non-EMV.  EMV is an acronym for Euro MasterCard Visa because Europe is where the chip technology originated.   The US had the majority of the world’s fraud but was behind Europe in adopting the technology.  It has proven to reduce fraud dramatically!

Some processors add extra fees only for the transactions that are swiped instead of dipped into the chip reader. Others add huge fees on the entire volume of money transacted because the merchant does not use an EMV chip terminal for their swiped transactions. Electronic Money Company has seen the non- EMV fees as high as .65% added to the other rates for card processing!  This fee is a big slap on the wrist and can cost merchants way more than the purchase of a new terminal!  For example, instead of paying 2.5% for every credit card transaction, these merchants pay 3.15%!  That’s is a 25% increase!  Plus, it is a lot of extra revenue for the processor! If your credit card volume is $10,000 per month, this fee adds $65 per month, but if your volume is $100,000 per month, the added fee is $650 per month.

You can get rid of this fee if you get rid of your old swipe-only terminal or device and replace it with a chip-ready device.  Ecommerce transactions plus over-the-phone transactions are card-not-present transactions and are not subject to the non-EMV penalty fee because the consumers have no way to dip their cards.  Contact us if you have questions or want to find out if you have this fee on your merchant statement.