U.S. merchants will spend over $90 billion in credit card processing or swipe fees in 2019. For many organizations, swipe fees represent one of their top five operating costs. Swipe fees continue to grow, not only due to an increase in card sales, but also due to increases in interchange and network fees. Just this spring, Visa and MasterCard announced significant increases in certain interchange categories and cross-border fees. Some merchants will see their swipe costs increase by up to five percent from 2018 to 2019 simply due to fee increases. This is not to mention the additional costs created by upgrading POS systems and payment terminals, adding a security solution (e.g. encryption, tokenization, fraud) and implementing omnichannel strategies (e.g., endless aisle, global tokens).
It has become imperative for treasury leaders to reign in out-of-control card processing costs. Passive management of this expense category isn’t an option for organizations seeking efficiencies and competitive advantage. Managing swipe fees is a process like any other process inside a company. And like any process, it can be made more efficient by measuring and optimizing all the components in the (payments) value chain. Our guidance below relies upon 200-plus consulting engagements with merchants processing $100 million or more in card sales per year.
