Protect Your Hotel From Fees That Needlessly Drive Up the Cost of Accepting Card Payments

By Bob Carr Chairman & CEO, Heartland Payment Systems | April 09, 2010

Interchange rates, rate increases and undisclosed mark-ups

No doubt, you have heard the old adage, "you have to spend money to make money." While there may be relevance to that statement, understanding a few key pieces of information about card processing can ensure you're not spending more than you have to when it comes to accepting electronic payments.

As a hotelier, accepting credit and debit cards for reservations and room payments is a way of life. However, recently, you may have noticed the mounting cost of these transactions. By the time a card is swiped, processing fees for a single transaction can range from two to five percent of the total sale. The fees for card processing services may be among the three highest expenses your hotel incurs, perhaps outmatched only by labor and property costs. Unlike overhead costs, you might not be sure what you are paying when it comes to processing card transactions. Yet, it is critical to identify all of the fees and surcharges - and who you're paying them to - so you can further control your expenses and save money.

The fact is there are three components of processing fees you, like every card-accepting merchant, must pay: interchange; dues and assessments; and processing fees. Understanding exactly what these fees are - and why you're paying them - can help you eliminate unnecessary costs and boost your bottom line.

Interchange

Interchange is the fee charged for passing financial transactional information back and forth between your hotel, your payments processor, the card brands (such as Visa®, MasterCard® or Discover® Network) and the banks that issue credit and debit cards. Interchange rates are determined and imposed by the card brands so banks that issue credit and debit cards can recoup their costs.

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