15 Aug Small businesses can use software to manage complicated interchange fees
A group of lawyers representing U.S. retailers are expected to submit a proposed $7.2 billion antitrust settlement against Visa Inc. and MasterCard Inc. for court approval within upcoming months. But, this settlement will arrive despite heavy opposition from small businesses around the country that may find their hands tied due to the proposal.
The antitrust settlement against the major credit card companies is designed to allow merchants to charge more on products paid for with a credit card to offset the fees retailers pay to the credit card companies for each transaction. Merchants had previously never been allowed that ability, although many have held strict credit card minimums and offered customers bargains encouraging them to make cash purchases. But, for merchants that accept Visa, MasterCard and American Express, the new settlement presents a Catch-22.
When a customer buys a product with a credit card, the merchant has to pay an interchange fee, which is why many companies prefer cash. But, according to the New York Times, under the new agreement, a merchant that accepts transactions via American Express must treat every electronic payment equally, per mandates from the credit card company. But, this ruling also applies to Visa and MasterCard debit cards, which prohibit surcharges on these types of cards. This makes it impossible for any merchants that accept all three to add a surcharge to any transaction as a means to pay for the interchange fee.
It’s clear that with this settlement, there are new complications to how retailers approach the way they keep track of their incoming revenue and outgoing expenses. When it comes to monitoring this important aspect of business, companies may want to invest in custom database software that can provide financial clarity, especially when monitoring interchange fees.
This customizable software can also be used to gain insight into payroll expenses, taxes, costs of inventory and product sales. This will help retailers identify strengths and weaknesses and curb reckless spending.