Misconceptions

• Most consumers don't realize that every time they make a purchase with a credit card, they are reducing the retailer's gross profit on the sale. While this would not necessarily be a customer concern, it does have an effect on price. For retailers whose payment consists of mostly credit cards, price has to be adjusted to reflect true cost. Interchange fees can significantly reduce profits, especially with high-dollar transactions and heavy volume.
  
  

Considerations

• Overseas transactions are some of the highest. When a retailer accepts a phone order and processes a card from out of the country, they can usually expect to be charged a higher fee or rate.
  
  Refunds are difficult transactions to process for most retailers. This is because they pay two interchange fees. The first fee is on the original sale. The second fee is when they refund you the money. Unless the card was processed the same day, most sales cannot be voided and the retailer will have to pay two fees.
  
  Chargebacks occur when a credit card holder disputes a charge from a retailer. The credit card company may give the retailer a specific time-frame to support the charge. Afterward, the retailer may be charged back the transaction. There are usually fees that accompany this. And an excessive amount of chargebacks may cause the retailer to lose card-processing privileges.
  
  

Identification

• One of the ways retailers try to reduce credit-card transaction costs is through identification. Since consumer credit is one of the riskiest forms, credit card companies want to reduce the likelihood of default or fraud as much as possible. One method is to offer incentives for the retailer to identify the cardholder. They can do this with a few different methods. One method is to ask for a form of identification that includes a picture, like a driver's license. Another is to obtain the CVS number or Card Verification System number on the back of the credit card. Usually the last three digits are requested. Some retail credit-card machines ask for verification with the cardholder's zip code. By identifying the cardholder, the retailer usually receives a lower interchange fee on the sale.
  
  

Types

• The type of credit card accepted by a retailer plays a part in what kind of transaction fee they pay. Typically, American Express and Discover charge higher rates or fees. This is why some merchants or retailers do not accept those cards. Visa and MasterCard are usually less expensive cards to process. Debit cards also have lower interchange fees. Some retailers appear to offer their own brand-name credit cards. However, most are backed by a major credit card company or bank.
  
  

Processors

• To curb the costs of credit card transactions, there is an industry of credit card processors. These are companies who promise to reduce interchange fees. They will want to know information like: how much in credit card sales does the business do each year; how many transactions are there; are any transactions overseas; how many orders are taken by phone; what percentage is Visa, MasterCard, Discover and American Express. While some companies may save you money initially, be wary of any additional fees they may charge.