In an entry called “The Cost of Confusion” at Forbes’s CIO Central blog, Corduro’s CEO Robert Ziegler shares some ruminations about the cost of payment acceptance and how merchants can seek benefits from the implementation of debit interchange pricing pursuant to the Durbin amendment. After the standard preamble and context-setting necessitated by such a mainstream venue, Ziegler gets to the crux of the issue:
Large corporations often have dedicated staff who analyze the rates to get the best terms for payment processing, and they can leverage the fact [that] they process a high volume of transactions each month in order to get favorable rates from the MSPs. Small and mid-sized businesses, however, often do not have the tools to identify the best rate plans or to select the best way to process specific types of cards to ensure the lowest rates.
While well intentioned, there still remains doubt about whether the Durbin Amendment will have the intended positive impact on small- and mid-sized merchants. If these merchants use blended rate structures for processing payments, there’s a possibility that the merchants’ confusion over the way qualified and non-qualified cards are processed may allow MSPs to give the appearance they’re passing through the benefits, when actually they’re not.
Ziegler goes on to point out the potential churn in the merchant market when the Durbin rules take effect, allowing merchants to renegotiate or terminate existing contracts with their acquirers. He also indicates the recent proliferation of cloud-based technologies offering more cost-effective payment processing, which can extend tangible benefits to value-chain participants. He concludes:
While laws like the Durbin Amendment are designed to help bring benefits to consumers and merchants, who are being forced to pay fees that are not in line with actual costs, the legislative option is not always the best solution. Advancements in technology, such as the models being employed by a new generation of payment processors, can have a more lasting impact on reducing complexity, giving greater – and clearer – visibility into the cost structure, and helping merchants select the plan that best suits their needs.
