The unfortunate truth of the structure of the payments industry in the United States means that merchants and consumers seem to be pinned against one another. Merchants are disallowed from passing their fees directly on to customers, and don't want to lose business by not accepting some forms of payments. Consumers want the ease of payment cards provide, and are also increasingly drawn to rewards cards that further squeeze their merchant's margins.
Of course, at root, it's the Visa, MasterCard, and Discover associations that enforce policies on their member merchants that prevent customers from seeing the true costs of their cards. The climate is changing though, as fees charged for processing receive more political attention after the Dodd-Frank financial reform. But in other ways, the tide is still turning against merchants: customers are using rewards cards more and more frequently and regularly, consumers are taught that they can "save money" in various ways that hurt merchants (see for example this article in Time).
What can merchants do to keep their customers happy without finding themselves stuck with unsustainable fees? We built our business on the idea that most important is having a relationship with your processor, that ensures they'll be watching out for what subtle changes you could make to your payment system to keep fees low.
But there's also one easy step to take with any processor to ensure you're getting a fair deal. "Interchange Plus" pricing means that your processor is passing on to you whatever it is that Visa/Mastercard actually charge them for the cards being used. A traditional, "tiered" plan works great if you know and trust your processor, but if you're signing up now, the best pricing is always the one that gives you the most information about your suppliers costs. If you know just what their margin is, you can be sure you're getting the price you should.
If you get a fair and transparent price on your processing, its easier for you to speak with your customers with integrity about what providing the service costs. In the long run, its making sure that we're all on the same page, not at odds with one another, that will help everyone get a good deal.
Matthew Koren is the President of Priority Payments Northwest, a credit card processing and payroll service provider located in Portland, OR. He runs his company, as well as partnering with a consulting practice: Causeit, Inc. You can contact him by filling out the Contact Us page, or by calling 503-548-6312, ext 750.