Retailers Pay More Than $60 Billion to Process Credit Cards in 2008

Online, November 18, 2009 (Newswire.com) - In a recent study conducted by the Nilsen Report, it was reported that retailers in the United States paid more than $60 Billion dollars in fees to process credit cards in 2008. Despite a lagging economy, high unemployment and flat spending by consumers, the cost to businesses to accept credit cards has risen steadily for 8 straight years. These fees are charged by payment processors that provide the services necessary to accept credit cards.

The major credit card companies and processors continue to enjoy strong results despite lower retail spending, high unemployment and a stagnant economy. Part of the reason for their strong performance in this economy is that retailers and those businesses that accept credit cards continue to pay unnecessary fees and excess charges to process credit cards.

The majority of the companies selling merchant services are resellers, independent sales agents, or referral agents who act as agents for large payment processors. According to The Nilsen Report, the top 7 payment providers processed over 90% of the Visa and MasterCard credit and debit sales in 2007. These "Big 7" payment processors have thousands of independent sales organizations that market their services, each with the ability to devise their own pricing model.

Faced with a dizzying array of pricing models and under constant bombardment by credit card processing salespeople, many businesses rarely perform a thorough review of their credit card processing costs. Dealing with high pressure sales tactics and different interpretations of data, many businesses spend weeks or months evaluating these costs trying to sift through all the information that is being presented to them.

All of these factors have led to the growth of companies like Financial Mitigation Services, who are in a growing business category that act as an independent expense management experts in credit card processing fee reduction. Says Jeff Zellmer, President of Financial Mitigation Services, "We have experienced tremendous growth in 2009. The key to our services is that our clients are not required to switch providers in order to achieve the lowest possible costs. We work with their current processing provider to uncover excess fees and unnecessary charges and recover those dollars on behalf of our clients."

Companies like Financial Mitigation Services and others are assisting businesses in navigating a very complex and growing cost category for both online and offline retailers. Many businesses in the online retail sector pay more for credit card processing than they do for labor, so it is an expense category that businesses are becoming increasingly aware of.

As businesses begin to focus more on expense management in areas they can control, expense management firms that work on a pay for performance model are likely to be popular choices for many businesses.