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Pricing advantages once held by super-large acquirers—those whose merchants process more than 3 million monthly credit and debit transactions—appear to have retreated, according to the Merchant Processing Pricing Benchmark Study recently issued by The Strawhecker Group.
These jumbo acquirers had, on average, the lowest amounts for their processing and authorization fees says Robert Schmitz, senior associate at the Omaha, Neb.-based payments consultancy. The Strawhecker report did not include the actual pricing averages for the jumbo or smaller groups of acquirers, defined as small for those with up to 250,000 in monthly transactions; medium, 250,001 to 1 million; and large, between 1,000,001 and 3 million.
The pricing for jumbo acquirers is virtually identical to the large group, Schmitz says. “The jumbo size is not getting an advantage there.”
Smaller acquirers, too, may be experiencing a squeeze. Though these three groups had a decrease in average pricing, it was not double digit, as it had been in the prior study. Strawhecker conducts the pricing report every two years.
The report, which includes data from 83 authorization platforms and 78 settlement relationships across more than 50 acquirers, also looked at scores of other pricing data, including terminal help-desk support fees, gateway fees, wireless point-of-sale terminal costs, and closed-loop gift card costs.
The data revealed that while some acquirers, especially the largest, may pass along low transaction costs to merchants, they make up for the reduction in processing and authorization fees with service charges, Schmitz says. “While they may focus on lower transaction-processing fees, they’re also charging more for more labor-intensive items,” he says.
As an example, some acquirers are assessing EMV-related fees. They may charge merchants a basis point amount on the volume of their card transactions that are not EMV enabled, Schmitz says. These fees are just starting to appear, he notes.
It’s essential for acquirers to not just look at their pricing and fee structure without looking at their entire portfolio, Schmitz says. If an acquirer has a lot of merchants with below-average transactions costs, other fees could compensate, he says. Conversely, other fees may not be as important for merchants with larger transaction volumes.
This equation is just as important for new merchants as existing ones. Because acquirers are reluctant to move merchants when buying a portfolio from their existing processors, it’s vital to consider other fees if the merchant’s processing costs are locked in, Schmitz says.
