January 1, 2023
5 Min

Dissecting Processing Costs & Understanding Approval Rates

Alyssa Cuda

Open Banking Expert

Finding Smart Alternatives to Complicated & Costly Processing Fees

Many merchants know that when a consumer makes a payment using a card, a whole series of information is exchanged before that transaction is approved. What appears to be a straightforward endeavor involves many intermediaries, including the card network, an acquirer, and the issuing bank.

In support of this, the card processing industry is complex, and merchant processing statements are convoluted, often including dozens of fees related to interchange and acquirer rates, markups, and assessment costs. These costly and convoluted processing fees impact the merchant’s ROI, making it necessary to charge consumers more for goods and services.

The Shifting Landscape

For decades, merchants have remained beholden to card companies—online payments were synonymous with credit cards. Now consumer preferences and behavior among Gen Z and other younger consumers suggest the demand for digital, contactless payment methods.

In 2023 and beyond, payment habits will continue to change, and merchants will need to adapt. The key to successfully optimizing the payments lineup will depend on the merchants:

  • Understanding of processing costs and the effect they have on their bottom line
  • Knowledge of factors influencing approval rates
  • Strategy for preventing fraud and managing chargebacks
  • Willingness to explore alternative payment options

Want to learn how to lower processing costs, increase approval rates, and modernize your payments strategy?

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