Blog Archive–NACM Blog Credit Real Time: The Latest in Commercial Credit

How Processors and ISOs Are Taking Your Hard-Earned Profits

Written by Super User.

In rough times, both consumers and companies on the brink will often rely on credit to get them through to the next payday. In recent years, credit card use has risen among both parties and, in many ways, this offers advantages to both buyers and vendors. Buyers get some extra time to pay back what they owe and merchants get their money quicker and with a minimal amount of excess paper.

In the world of B2B transactions, however, the cost of credit card acceptance can be frustrating at best and downright vicious at worst. Interchange fees often can erase a percentage of the potential profit that a company has coming to it and the effect these fees have on a company's bottom line can be extremely prohibitive depending on a company's size and market share. For credit professionals looking for a way around the often confusing world of B2B credit card processing and interchange fees, Robert Day, vice president of commercial interchange at Fifth Third Bank, Inc., recently offered a crash course on the subject in one of NACM's Added Advantage teleconferences entitled "The Great American Heist: How Processors and ISOs Are Taking Your Hard-Earned Profits."

"The title says it all," said Day. "It gives you my opinion of this industry and I imagine most people feel the same way. You work very hard for your profits and then all of the sudden you turn around that you're paying as much as 5% [per transaction]." What's worse, Day noted, is that many companies may believe they're paying much less per transaction that 5%, but the truth is that they're being charged much more without knowing exactly why. "A lot of you are probably paying closer to that 5% than you realize," he said.

In his 90-minute presentation, in between breaks for questions from attendees, Day led listeners through the ins and outs of the credit card acceptance process and gave them the tools they needed to better understand, and thereby get the most out of, the B2B processing industry. "There's not one thing that we do in this country that we all have in common other than Visa and MasterCard when you think about it. We all use a Visa or MasterCard product and more times than not we use both," he said. "That affects us all and there's no way to get away from this. You're going to have to get a good understanding of this industry and have a fighting chance."

The first step toward getting a handle on interchange charges is to ensure that the merchant has been set up properly by their processor or ISO (independent sales organization), either as a retail user or a MOTO user, which stands for mail order/telephone order and is a type of card-not-present (CNP) processing service. "You need to get with your processor or your ISO and you need to ask them how you are set up," said Day. "Are you set up as MOTO or are you set up as retail? There's a reason you need to ask, because the rules shift and it's really common for people to set you up on the wrong interchange category." Being set up in correctly can lead to problems on interchange later down the road.

Day also discussed the different levels of data required to reduce interchange costs and also common mistakes made that increase expenses for credit card accepting companies. For more on NACM's teleconference series, or to register, click here.

Jacob Barron, NACM staff writer. Follow us on Twitter at


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