Digital transactions have created an opportunity for powerful credit card processing companies to profit by including hidden fees in credit card transactions.
These days, technology streamlines almost every aspect of our lives. Even everyday business is managed with plastic cards that represent digital currency.
These digital transactions have created an opportunity for powerful credit card companies. Many credit card providers have included hidden fees in their credit card contracts with businesses. The government is inquiring if these credit card fees are necessary or ethical.
Is there a way to eliminate credit card fees? Allset can help by offering a payment product that uses Zero Cost Processing to help you avoid transaction fees. Check out Allset for yourself.
Hidden Fees Every Time You Swipe
To accept certain credit cards, business owners agree to a contract with the credit card company. This contract is often very long and includes details about transaction fees (interchange fees).
The business is required to pay a percentage, anywhere from 3% to 7% of its total earnings from credit card transactions. Credit card processing companies can inflate that percent to control the margin they make per transaction. This creates a couple of problems:
Credit card processing companies can charge a business more than necessary.
Small businesses may have to charge more than is reasonable to stay in business.
Consumers, even those without credit cards, have to pay extra for every purchase.
Processing Companies Are Benefiting From These Fees
When a business uses a credit card processing company to accommodate their customers, they are at the mercy of the processor where fees are concerned.
Zero Cost Processing takes the small business out of the fee equation. Instead of charging the business those credit card fees, Allset directs those fees to the customer so you can focus on running your business without figuring fees into your prices.
How Credit Card Fees Affect Small Businesses
Businesses everywhere are affected by these interchange fees, but small businesses suffer the most:
Fees | Businesses must pay a percentage of their total revenue to credit card processing companies to accept certain cards.
Prices | To keep up with the fees, businesses have to raise their prices, which could discourage customers.
Supply | Because interchange fees add to inflation and increase supply prices, small businesses can find it tough to obtain materials.
Fortunately, with Zero Cost Processing, Allset can help you avoid paying unnecessary fees, allowing you to provide services to clients using any type of credit card.
Is the Government Helping?
Part of the government’s job is to create equal opportunity and a profitable market for all. This involves regulating market powers like credit card companies, but not necessarily credit card processing companies like Stripe, Venmo, or PayPal.
Recent Senate Hearing
Shortly after Visa and Mastercard raised interchange fees in April 2022, the Senate held a hearing where they listened to representatives from businesses, Visa, Mastercard, banks, and consumer support organizations. The council brought up the issue of interchange fees and discussed some important points:
Transaction fees increase inflation, and Visa, Mastercard, and processing companies benefit from inflation.
Credit card companies can charge whatever they want because there’s no competition.
Other countries have effectively put a cap on interchange fee amounts, but not the U.S.
The Senate didn’t conclude anything in the hearing, but they suggested several compromise solutions:
Give merchants a choice of card providers.
Remove the portion of transaction fees that apply to sales tax.
Set limits on the interchange fees so they won’t contribute to inflation.
Create clear credit card contracts that explicitly tell customers what the fees are.
Make a standard of security for every credit card provider, eliminating the need for fees.
While the government is looking into a solution, as it stands, there are very few options for small business owners trying to eliminate credit card fees to stay in business. Products like Allset’s Zero Cost Processing help business owners avoid paying those interchange fees themselves. We have the solution for small businesses ready to go.
Eliminate Credit Card Fees
Tired of paying fees to big corporations just to keep your clientele? That’s why we’re here. Allset offers a payment product that simplifies accepting payments from your clients.
Our platform offers Zero Cost Processing. You won’t have to work transaction fees into your prices anymore! Many of your customers are already used to paying such fees for other services like DoorDash, Uber, and Airbnb. With Allset, you’ll be able to deliver quality products and services without worrying about paying a percentage of your earnings to a credit card processor.