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Things You Do Not Know About Your Credit Card Processing That You Should
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Things You Do Not Know About Your Credit Card Processing That You Should

by Don Kesner

(Originally published in the Fall 2014 KGA/KACS)

In today’s evolving world credit card processing the number one cost to small and medium size businesses is credit card fees. As credit card transactions continue to grow (U.S Purchase Volume of credit, debit and prepaid cards in 2013 was at $2.9 trillion) it is evident that merchants’ ability to handle credit processing without damaging their cash flow as well as profit is the key to operating more effectively in the payment-processing world they live in today.

Unfortunately credit card processing knowledge and transaction information is so scarce and complex that most merchants, if any, can’t allocate the time and resources to combat the operational challenge they face. So what are some of things that merchants should know about credit card processing that they aren’t doing today?

Settlement: Do It Daily, Not Monthly
First and foremost, settlement is something merchants should be doing every day. In a perfect world this would be an easy thing to accomplish but due to lack of resources, personnel and the thousands of other things the operations team is tasked with, the “monthly settlement” period has pretty much become the standard operating procedure for most businesses. This process is manually intense and most of the time happens infrequently leaving wide-open potential financial impacting issues (i.e. keying errors & intellectual property loss due to position turnover) that affect your P&L and ultimately your cash flow. 

Chargebacks: the not-so-silent and deadly killers
Merchants know chargebacks are bad, but many aren’t aware of simple facts that can help them better understand and guard against fraud accordingly. 49% of all fraudulent chargebacks happen after 60 days or more from date of purchase.

Once a customer files a dispute a merchant has fourteen days to respond or they will be charged a fee and lose the face value of the transaction. Even though disputes between merchants and customers happen every day, there really isn’t a great solution that helps merchants solve the problem of chargebacks or the issue of how to properly reconcile against them. The only solution is to be proactive in limiting chargebacks by tackling them head-on and not ignoring them. It is especially challenging if the notification document mailed to the merchant arrives on the same day the fourteen-day response timeline ends. Leaving the merchant no choice but to eat the cost of the chargeback.

Interchange: Are You Getting the Best Rate?
Merchants know downgrades are profit killers and that every processor in the world has the “best rates” to process credit cards. How many merchants have gotten that phone call? Many of you have also been through this scenario: terminal is down so your cashier types in the card number versus swiping the card. Did you know that this downgrade just affected your interchange rate negatively? If you don’t you should. There are many tools that exist that report downgrades, but very few, if any, show the cost of a downgrade as it relates to your optimal possible interchange rate.

The world of credit card processing for merchants can be a harsh and often-misunderstood reality leaving many retailers crippled trying to manage this growing business expense. The finance and operations arm of businesses must continue making process improvements. New technologies must allow for payment data to be accessible anywhere, anytime on any device and be processor agnostic. Finally, access to payment data must be available for executives all the way down to the cashier to provide complete, unfiltered strategic direction on electronic payments within the business.

As a significant expense to businesses, KGA/ KACS continually works on credit card interchange issues and has new approved partner programs that can assist your business gain better control of credit card interchange rates.

Don Kesner is Director of Product Development for First Touch Payment Solutions, a Memphis-based software company that works with businesses to solve credit card processing pains, merchant processes around credit card payments and save them time and money using software and technology. He is a former member of the leadership team for First Data. Don can be reached at

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