Understanding the Challenges of Credit Card Processing

Mark Canes

Guest Post by Robert Hyman of HiTech Merchants

eCommerce and the trend to replace paper checks with electronic payments is quickly driving credit card acceptance to the forefront of B2B commerce.  As such, there are a number of challenges that must be dealt with when your business starts accepting card payments.  Three of them are discussed below.

  1.  The True Cost of Credit Card Processing
  2.  Service
  3.  Software Integration

The True Cost of Credit Card Processing

One challenge is determining the true cost of credit card processing.  Complicated pricing models make it difficult to understand the real cost of accepting card payments. For example, interchange differential pricing charges a qualified rate, a non-qualified rate and an interchange differential fee all on the same transaction.  Calculating costs with this model is understandably difficult and time-consuming.  Interchange plus pricing represents a more transparent pricing model.  Interchange plus pricing charges a simple mark-up above the base cost set by Visa and MasterCard allowing for a common price structure to compare one processor to another.

Moreover, there are over 300 base rates for credit cards in Canada, over 3,000 in the United States, and 50 different types of fees. As such, businesses must invest a great deal of time if they wish to comprehend all the complexities of credit card processing.  One approach is to talk to a few processors, learn about mobile options, time-saving integration opportunities and pricing programs, and use what you learn from three to negotiate the best deal with one.

Often the difference between a well negotiated processing contract and a quick sign-up may mean banking an additional .5% or more of credit card receipts.  A practical option, considering the complexity of the industry, is to use a payments broker that represents numerous processors.  An experienced broker can analyze your requirements in light of their extensive industry knowledge and negotiate with several major processors to best meet your payment needs and access the most favorable pricing.


A second challenge of accepting credit card payments is service.  The majority of transactions flow through the system with no complication. Unfortunately, there is a tiny number of transactions that go astray that render good service invaluable.  These anomalous transactions eat up a disproportionate amount of time and cause significant frustration.  The big processors are best equipped to handle these situations as they have a sufficient volume of transactions to make it economical to staff teams with specialized knowledge of these irregular occurrences.  Nevertheless, many frustrating minutes have been spent bouncing around processors of this size before the correct person becomes involved.  This is another area where an industry broker with a strong after-sales-service philosophy is vital.  A good broker knows who to call to short cut issue resolution saving time and frustration.

Software Integration

A final challenge related to accepting card payments is software integration.  The use of ERP software as a foundation for payment processing is a method to mitigate difficulties for your business.  If your ERP software doesn't integrate with your payment gateway an excess of redundant data entry is needed. Investigating software integration is a case of the more you learn, the more you become aware of what you don’t know.  You’re likely to find necessary expertise from your ERP technical support team.  They have the expertise you need and will be able to advise you on POS systems, shopping carts and payment gateways that are compatible with their software.