Credit card or interchange fees are set by credit card companies, such as Visa® or MasterCard®. The fees are assessed for transmitting financial information among a seller, banks that issue credit cards and banks that accept the cards. (For more information see Accepting P-Cards: Fast Cash, No Billing.)
For AR departments that accept credit card payments, interchange fees are a major issue. Although the credit card companies establish the rate, you can take steps to reduce the charges, as the following suggestions illustrate:
- If you have a high volume of p-card payments, you may receive discounts for providing more detailed data such as level 2 (sales tax) or level 3 data (product code, quantity, units of measure and incremental information on tax and price).
- Include your AR department contact information on bills so customers with questions can call, and you can help prevent charge-backs that can increase interchange fees.
- When possible, ship complete orders. If a partial order is shipped, the settlement amount may be less than the authorized amount, which could raise interchange fees.
- Swipe cards instead of keying information, which may increase interchange fees.
- If you must key information manually, use an address verification service (AVS) to lower interchange fees. (AVS is a fraud prevention tool that compares portions of a cardholders' address, such as zip code, to the billing address.)
- Batch your credit card transactions at the end of each day. Payment processors have only two days to settle transactions. If you submit transactions weekly or monthly, you will pay higher interchange fees.