Unless you are an international traveler, you may not realize US consumers are paying more for credit card processing than other areas of the world. This information may not come as a surprise to American merchants who have been battling the high cost of processing for years. Despite the high cost of processing credit cards, many US merchants feel they have no choice if they want to remain competitive in their industry. It is a well known fact that merchants who accept cards attract more customers than businesses who do not. Giving customers more options pays well in terms of sales, however with each sale the cost of accepting cards gets higher.
Why So High In The US?
Merchants doing a side-by-side comparison of processing fees by country will notice US merchants are paying higher processing fees than that of most other countries. This may be due to the relatively unregulated fee structure in the US compared to that of other nations. With each credit card processing company establishing their own rate structure, US merchants are especially vulnerable to higher processing fees. In other countries, it appears there is a bigger focus on the actual cost of processing with a much smaller difference between the minimum and maximum fees applied.
Technology and Fraud Prevention
Another reason US merchants may be paying more than merchants in other parts of the world could be traced back to the technology in use which helps improve fraud prevention. Most major credit card issuers have a policy in place which protects credit card users from being responsible for fraudulent charges to their account. This is good news for the credit card user, however someone has to absorb the cost of fraudulent charges. Usually this is the merchant or even the bank backing the credit card. In either event, fraud drives the cost of credit card processing up. For this reason, technology which prevents fraud can drive processing costs down. The US is several years behind some other countries who are already using new technologies in credit card processing.
How To Lower Credit Card Processing Costs
The current climate within the credit card processing industry is volatile to say the least. As the government tries to regulate fees in new ways, the credit card companies, processors, banks and merchants must all pay close attention to how these changes will impact fees. The goal is to lower the cost for consumers, however if certain regulations drive the cost higher for merchants, the end result may be higher prices for everyone, including consumers. To lower processing fees, the system in the US may look to other countries currently using new technology as well as a more regulated fee structure. Lessons learned from observing how other credit card processing systems operate prove it is possible to use, accept and process credit cards at a lower rate for all. With this in mind, all parties involved in the processing of credit cards including consumers and merchants must pay close attention to what is happening within the industry.
